On-chain data shows that Bitcoin has breached these three key levels in a manner reminiscent of the April 2019 rally.
Bitcoin Breakout Shows Initial Similarities to April 2019 Rally
According to data from the on-chain analysis firm glass node, BTC has breached all three levels of investor cost basis for the first time since the COVID-19 crash and the 2018-2019 bear market. The relevant indicator here is the “realized price”, to understand the concept of “realized stop” it is necessary to analyze it first.
The realized cap is a capitalization model for Bitcoin that assumes that each coin in the circulating supply has its real value as the price it last moved at rather than the current price of BTC (which normal market capitalization uses for its calculation). calculation).
Now, from the realized cap, a “realized price” can be obtained by dividing the metric by the total number of coins in circulation. Since the realized cap represented the prices at which investors bought their coins (i.e. their cost basis), the realized price can be thought of as the average acquisition price in the market.
This means that if the normal price of Bitcoin falls below this indicator, it can be assumed that the average holder has entered a losing state. While this realized price is the average cost basis for the entire market, the metric can also be defined only for specific groups of investors.
The BTC market can be divided into two main cohorts: short-term holders (STH) and long-term holders (LTH). Investors who bought their coins in the last 155 days fall into the STH, while those who have held them before that threshold fall into the LTH.
Here is a chart showing the trend in the realized price of Bitcoin for the entire market, as well as for these two sets of holders separately, over the past few years:
BTC seems to have broken through all of these levels recently | Font: Glassnode on Twitter
As the chart above shows, Bitcoin had broken above the STH cost basis and the realized price of the entire market earlier in the latest rally, suggesting that the average STH and overall average investor are back in profit.
In the most recent continuation of the rally, the crypto has now breached the LTH cost basis of $22,400. This means that the average investor in each segment is now in the green.
The last time Bitcoin broke above all of these levels was after the COVID-19 black swan crash, which had driven the coin below these prices briefly.
A similar trend also formed in April 2019, when the bear market of that cycle ended and a bullish transition occurred. Although it is too early to tell at this point, this similarity between the two rallies could indicate the path that the current one could also end up following.
At the time of writing, Bitcoin is trading around $22,900, up 8% over the past week.
It seems that BTC has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured Image of Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
This post Repeat of April 2019? Bitcoin Rally shows this similarity
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