As a seasoned crypto investor with a knack for deciphering market trends and an eye on the latest data, I find the recent Bitcoin price movement particularly intriguing. The fact that Bitcoin found its bottom near the cost basis of active investors, as suggested by Glassnode’s report, is a strong indication that we might be witnessing a shift in the market sentiment towards bullishness.
Based on blockchain data, it appears that the price of Bitcoin may have hit its lowest point after the recent drop, aligning with a significant investor’s average purchase price threshold.
Bitcoin Found Its Bottom Near Active Investor’s Cost Basis
Based on the most recent weekly report from Glassnode, Bitcoin appears to have hit a recent low point around the investment cost for active investors. To grasp the significance of this level, it’s essential to consider two other metrics initially: the Realized Price and the Activity Level.
The Realized Price refers to the cost basis or acquisition price of the average investor on the BTC network. The metric determines this by going through the transaction history of each token in circulation to find what price it was last moved at.
After assuming that the latest transaction was the final one where the Bitcoin was exchanged, it uses the price at that time as the current cost base. Then, it calculates an average of this value for all Bitcoins in circulation, which is frequently regarded as the Bitcoin’s “true” or “fair market value.”
Another measure, referred to as Liveliness, tracks the investment habits of investors by considering the period during which their Bitcoins remain stationary on the blockchain. This metric is calculated using a concept called “coin days,” where each Bitcoin accrues one coin day after being idle for a day on the blockchain.
In simple terms, when coins are held (HODLing) within the network, a type of “age” or “new coin days” is incremented daily. Conversely, when coins are spent, any previously accumulated “coin age” or “new coin days” are effectively reduced or “depleted.”
The Vitality indicates the proportion of coin days that have been annihilated compared to those generated throughout the entire existence of the cryptocurrency.
When the market exhibits a tendency to hold onto coins rather than distribute them (HODLing behavior), the metric’s value moves closer to zero because fewer coins are being destroyed with short lifespans. Conversely, if coin distribution is prevalent, the metric approaches 1.
In our ongoing conversation, the key metric we’re zeroing in on is the “Realized Price-to-Vitality Ratio” or the “Active Investor’s Cost Basis.” Essentially, this ratio gives more importance to Bitcoin’s market value (its fair worth) based on its activity level, which we refer to as Liveliness.
Adjusting this feature leads to a projected increase in BTC‘s intrinsic worth when long-term holding (HODLing) predominates and a decrease when distribution is more prevalent. The following graph illustrates the evolution of the Bitcoin Realized Price-to-Vitality Ratio over the last decade:
According to the chart shown earlier, the Bitcoin Realized Price-to-Life Ratio stands at approximately $51,300 right now. Interestingly, during the latest market downturn, Bitcoin’s lowest point was quite close to this figure.
According to Glassnode, the cost-basis for active investors is an important dividing line between optimistic (bullish) and pessimistic (bearish) investor attitudes. The fact that the market has held up near this level implies there’s a certain resilience, indicating that most investors believe the market will continue to grow in the immediate and medium-term future.
BTC Price
Over the past day, Bitcoin experienced an increase of nearly 4%, pushing its value beyond $61,000.
Read More
Sorry. No data so far.
2024-08-15 07:19