• On-chain data shows Bitcoin has broken above three key levels in a manner reminiscent of the rally in April 2019.
• The indicator used to measure this is the „realized price“ which can be obtained by dividing the „realized cap“ by the total number of coins in circulation.
• The BTC market can be divided into two primary cohorts: short-term holders (STHs) and long-term holders (LTHs).
Recent on-chain data has revealed that Bitcoin has broken above three key levels in a manner reminiscent of the rally seen in April 2019. This is a promising sign for the crypto market as investors and traders alike look for signs of recovery from the COVID-19 crash and the 2018-2019 bear market. To measure this, the on-chain analytics firm Glassnode has used a metric known as the „realized price“.
The concept of the „realized cap“ is used to understand the realized price. This is a capitalization model for Bitcoin that assumes that each coin in the circulating supply has its real value as the price at which it was last moved rather than the current BTC price (which the normal market cap uses for its calculation). By dividing this metric by the total number of coins in circulation, a „realized price“ can be obtained. This can then be thought of as the average acquisition price in the market, meaning that if the normal price of Bitcoin dips below this indicator, the average holder can be assumed to have entered a state of loss.
The BTC market can further be divided into two primary cohorts: short-term holders (STHs) and long-term holders (LTHs). Investors who bought their coins within the last 155 days fall into the STHs, while those who have held their coins for longer than that are classified as LTHs. Using this data, Glassnode has been able to identify that both short-term and long-term holders have seen their cost-basis levels break above the current BTC price, indicating a bullish trend.
This is good news for the crypto market as it suggests that investors may have re-entered the market with confidence. With the increased interest in Bitcoin, it is likely that more investors may be encouraged to enter the market, driving up prices further. While the market is always subject to volatility, the recent on-chain data could be a sign of a sustainable recovery for Bitcoin.