As Bitcoin continues its strong rally, $22,400 could be the next level to watch, if this on-chain metric is anything to go by.
Bitcoin long-term holder realized price is currently around $22,400
According to Glassnode’s latest weekly report, BTC surpassed all three realized market prices in April 2019. To understand the concept of “realized price”, one must first look at the realized cap. The realized cap is a capitalization model for BTC that values each coin in circulation at the price at which it was last traded.
This is different from the usual market cap, which puts the value of all tokens at the same current Bitcoin price. When you divide the market capitalization by the total number of coins in circulation, you get the price of BTC, a fact that is not at all unexpected, since the market capitalization is calculated by multiplying the price by the number of starting coins. .
However, if this same idea is applied to the realized cap (ie divided by the number of coins), a kind of “realized price” can be derived. The importance of this price is that it is the cost basis of the average holder in the Bitcoin market.
The implication of this is that if the (normal) price of BTC falls below this realized price, the average investor may be thought to have entered a state of loss.
All investors in the market can be divided into two main cohorts: the “short-term holders” (STH) and the “long-term holders” (LTH). The former includes investors who purchased their coins less than 155 days ago, while the latter consists of holders who have been holding their coins for longer than that period.
Now, here is a chart showing the trend in realized price for the entire Bitcoin market, as well as STH and LTH, over the last five years:
It seems that the value of crypto has surpassed all but one of these metrics | Source: Glassnode The Week Onchain – Week 3, 2023
As shown in the chart above, the BTC price had been below these three realized prices for much of the bear market, suggesting that the average Bitcoin investor across all cohorts was suffering an unrealized loss.
However, in the most recent rally, the cryptocurrency has so far managed to break above the cost basis of STH ($18,000) as well as the entire market ($19,700). The coin has yet to reach LTH’s realized price of approximately $22,400.
A similar rally took place in April 2019, which marked the end of the 2018-2019 bear market. But on that rally, Bitcoin managed to break through all three realized prices.
If a similar transition is indeed taking place in this bear market, then the $22,400 level could be the next to watch, as a break above could imply a return towards a bullish regime.
As of this writing, Bitcoin is trading around $21,100, up 22% in the past week.
BTC continues to move sideways | Source: BTCUSD on TradingView
Featured Image of Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
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