Summary
- For the first time since May 5, 2019, the short-term holder realized price is above-realized price.
- This same event also occurred in the 2015 bear market on Nov. 3, 2015.
- The Bitcoin price must remain above $20,000 in the short term to increase the cost basis of the STH cohort.
Background
Bitcoin is currently going through a bear market cycle which has been seen previously. The metric used to measure this bear market is called Realized Price which reflects the average on-chain acquisition price for the entire coin supply. This can be subdivided into two more metrics: Short-Term Holder (STH) Realized Price and Long-Term Holder (LTH) Realized Price. STH Realized Price reflects coins held outside exchange reserves that were moved within last 155 days and LTH Realized Price reflects coins held outside exchange reserves that have not moved within last 155 days.
Significance
For the first time since May 5, 2019, this current bear market cycle has seen STH realized price exceed realized price. This same event also occurred in 2015’s bear market on Nov. 3, 2015 as well. At present, STH realized price is at $19,892 while realized price is at $19,850; thus it is important for Bitcoin’s price to stay above $20K in order for STH cost basis to increase. In addition, if STH realized price manages to get higher than LTH realized prices — which are currently a difference of $3K — then this could signal an end to this bear market cycle.
Analysis
In order to accurately assess what effect this could have on Bitcoin’s future performance it will be important to closely monitor both STH and LTH realized prices over upcoming weeks and see if any further developments occur or whether there will simply be no change in momentum due to different factors such as increased selling pressure or increased buying pressure from institutional investors etc. It should also be noted that even though these metrics can provide some insight into how certain parts of crypto markets work they do not tell us anything about how general sentiment surrounding cryptocurrencies may or may not be changing over time as those changes are much harder to accurately measure without additional data sources being taken into account such as investor sentiment surveys etc.
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It appears that for now at least we have seen STH realize prices exceed current realize prices which could signal a potential end for this bear market cycle but only time will tell if that prediction turns out correct or incorrect based on further developments over upcoming weeks and months. In addition it should also be kept in mind that these metrics merely represent one small part of broader cryptocurrency markets so their relevance might become limited depending upon what else happens around them in terms of investors sentiment etcetera