Bitcoin might be on the verge of a bullish phase, as highlighted by CryptoQuant community manager Maartunn. Recently, the cryptocurrency has climbed above the average cost basis of short-term holders (STHs), a historically bullish sign.
Understanding the Realized Price of Short-Term Holders
The “Realized Price” is an indicator that tracks the average price at which investors acquired their Bitcoin. When the current spot price of Bitcoin is higher than this average, investors are typically in profit. Conversely, when the spot price is lower, they are holding unrealized losses.
This analysis focuses specifically on the Realized Price for STHs, who are those investors that have bought Bitcoin within the last 155 days. This group is distinct from long-term holders (LTHs), who have held their Bitcoin for a longer duration.
Market Dynamics
Recent data shows that Bitcoin’s spot price had fallen below the STH Realized Price last month, causing this group to be in a net loss position. However, with the latest rally, Bitcoin has moved back above this crucial level, indicating a potential shift in market sentiment.
Significance of the Indicator
Maartunn points out that reclaiming this level is “usually a very bullish sign.” Historically, when Bitcoin’s price breaks above the STH Realized Price after an extended period below it, it often leads to significant upward momentum. The last notable instance was in October of the previous year, which preceded a bull run that resulted in a new all-time high (ATH) for Bitcoin.
Investor Behavior and Market Implications
The bullish nature of this signal can be attributed to the behavior of short-term holders. These investors are generally more sensitive to price movements. When Bitcoin’s price approaches their average acquisition cost, bearish STHs might sell to avoid losses, while bullish STHs might accumulate more, viewing it as an attractive buying opportunity.
Currently, Bitcoin’s rise above the STH Realized Price suggests that these investors are not selling off, indicating a prevailing bullish sentiment.
Recent Bitcoin Price Movements
Bitcoin recently surged above $66,000 but has since seen a slight pullback to around $64,800.
In conclusion, Bitcoin’s move above the Realized Price of short-term holders is a significant bullish indicator. This development could pave the way for further price increases, supported by the optimistic behavior of short-term investors.
