On-chain data shows that the average short-term holder of Bitcoin is back in profit as BTC continues its sharp upward momentum.
Bitcoin Is Now Above Its Short-Term Price
As data from on-chain analytics companies Glassnode, the price of BTC is currently higher than the average cost basis of short-term holders. The relevant indicator here is “realized price,” derived from the concept of “realized close.”
Realized capitalization is a capitalization model for Bitcoin that aims to find the “true” value for BTC by putting the value of each coin in not the current BTC price (as happens in the normal market cap) but the price where it is. the last coin transferred.
When the market cap is usually divided by the total number of coins in circulation, the price of BTC returns (the most surprising fact, as the market cap has been calculated by multiplying the price by the total number of coins, to begin with). If the same idea is applied to the realized cover, the “realized price” can be obtained.
This price is important because it reflects the average cost base (ie, the price at which the average holder earns the coins) in the Bitcoin market. This means that if the regular price sinks below the realized price, it is fair to conclude that the average investor is holding at a loss.
The Bitcoin market is divided into two main groups: “short-term holders” (STH) and “long-term holders” (LTH). STH includes investors who have owned the coin in the last five months (155 days, to be exact), while anyone who has held the coin longer than those in the LTH group.
Now, here is a chart showing the price trends realized for the entire market, as well as for the two groups of holders separately, over the past few years:
Looks like the LTH realized price is the highest at the moment | Source: Glassnode on Twitter
As shown in the chart above, Bitcoin has broken above the $17.8k STH realized price in the latest rally, which means that the average investor who bought in the last five months is now back in the green. On the other hand, the average LTH is still underwater today, as the cost base is higher than $20k.
BTC is currently heading towards a market realized price of $19.7k. Historically, this level provides resistance during bear markets, and a real break above this level generally results in a return to bullish momentum.
It remains to be seen whether Bitcoin can overcome this resistance this time, assuming that the rally continues long enough to retest the level.
BTC price
At the time of writing, Bitcoin is trading around $19,200, up 14% over the past week.
The value of the crypto seems to have shot up | Source: BTCUSD on TradingView
Featured images from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com