On-chain data shows that bitcoin recently made a breakout that led to rallies of at least 99% over the last three times it happened.
bitcoin has now surpassed the cost base of “single cycle HODLers”
in a new mail On X, analyst Ali talked about a level that btc has recently surpassed. The level in question is the cost base of long-term holders of single-cycle bitcoin. The terms may not be familiar to you, so here’s what they mean, one by one.
First of all, “long-term holders” (LTH) here refer to investors who have held their coins for at least 155 days. LTHs are made up of settled diamond hands or HODLers, who rarely sell even when volatility occurs in the market.
Next, “Single Cycle HODLers” specifically refers to those LTH who purchased within the span of a single btc cycle. Their range is generally considered to be 6 months to 3 years. This means that the oldest of these investors (with 3-year coins) would have been through all the chaos of the current cycle, from the 2021 bull highs to the 2022 bear lows.
Lastly, the “cost basis” refers to the average purchase price of a group of bitcoin investors. If the spot price of the cryptocurrency is trading below this value, it means that the cohort in question is in a state of net loss. Similarly, the asset being up implies profit dominance.
Now, here’s a chart showing the trend in the cost base of single-cycle LTHs over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-just-surpassed-a-level-that-historically-leads-to-rallies.jpeg" alt="bitcoin Single Cycle HODLers” width=”1800″ height=”1013″ loading=”lazy”/>
Looks like the price of the asset has interacted with this level in recent days | Source: Glassnode on X
Currently, this metric is worth $34,150, meaning bitcoin has already surpassed it with the latest rally. This means that the average single-cycle HODLer who had been making losses since the first half of 2022 has finally turned profitable again.
On the chart, Ali has also highlighted the trajectory btc followed during the last three times it broke above this level. It would appear that each of the last two major bullish rallies came after breakouts that took place in 2016 and 2020, respectively.
Since the time of this breach, the cryptocurrency enjoyed returns of 4,778% and 787% over the course of the respective rallies. The recovery rally that began in April 2019 also saw a breakout of this cost base, following which btc posted gains of 99%.
If this single-cycle HODLer cost basis pattern paving the way for a bitcoin rally is anything to go by, then the asset could see a surge now that it has once again broken through that level.
As bitcoin‘s current rally is more similar to the April 2019 recovery rally, it is possible that if a rally does occur, it will be more in line with this rally, rather than full-blown bull runs.
btc Price
bitcoin has gone silent recently as it only posted 2% gains in the last week, with the price now floating above $35,200.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-just-surpassed-a-level-that-historically-leads-to-rallies" alt="bitcoin price chart” width=”1534″ height=”869″ loading=”lazy”/>
btc has been stuck in consolidation recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, Glassnode.com
