The analyst pointed out that bitcoin’s price is once again above the base price of short-term holders, which could be a bullish signal for the asset.
Bitcoin is again above the realized price of short-term holders
As Maartunn, CryptoQuant Community Manager, explained in a novel article fasting on X, BTC has regained the Realized Price of short-term holders. “Realized Price” here refers to an indicator that, in compact, tracks the average cost base of investors in the Bitcoin market.
When the value of this metric is greater than the spot price of the cryptocurrency, it can be assumed that the average holder in the sector has some unrealized profit. On the other hand, the indicator is below the price of BTC indicates the dominance of losses in the market.
In the context of the current discussion, the realized price of the entire user base is not captivating, but only a part of it: short-term holders (STH). STH refers to Bitcoin investors who bought their tokens in the last 155 days.
This group is one of the two main divisions of the BTC sector based on holding time, with the rest of the market referred to as long-term holders (LTH).
Here is a chart showing the realized bitcoin price trend for this group over the past year:
As you can see from the chart above, the bitcoin spot price fell below the realized STH price last month, meaning this group suffered a net loss.
However, after remaining below the line for some time, the cryptocurrency has surged above that indicator on the back of a recent rally, returning the group to profits.
“This is usually a very bullish sign,” Maartunn notes. The chart shows that the last time the asset broke above this level after spending a long time below it was in October of last year. That surge above the line started a run that eventually led to the coin setting a novel all-time high (ATH).
As for why BTC breaking above the STH Realized Price has historically been bullish, the answer lies in investor psychology. STHs, which are relatively inexperienced hands, can be sensitive to price changes. More specifically, they are likely to react when their average cost base undergoes a retest.
When these investors are bearish, they may decide to sell when the price rises to their cost base because they may fear that the rise will not last. Similarly, they respond by accumulating further during periods of growth because they may see their cost base as a profitable point to buy more.
Given that BTC has recently managed to break above this line, it does not seem that STH is currently offering any resistance. The bullish sentiment is still dominant among them.
BTC price
Yesterday, the value of Bitcoin rose above $66,000, however, there has been some decline since then and the price of the coin has dropped to $64,800.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
