Bitcoin Cost Basis, Long-Term Holders, And The Cyclical Bottom

Crypto News
5 Min Read

Bitcoin Cost Basis

In this month The Bitcoin monthly, ARK Invest focused on Ethereum and the merger. As a side note, they’ve published some premium and review-worthy stats that we’re about to discuss. Regardless of the market, the Bitcoin network continues to produce block after block anyway. However, the metrics that this whole activity produces can be critical to understanding the market.

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That’s where The Bitcoin Monthly from ARK Invest comes in. The publication defines itself as “an “earnings report” that describes the operations in the chain and demonstrates the openness, transparency and accessibility of blockchain data.” So the data we are going to cover is the reason of The Bitcoin Monthly.

The Bitcoin Monthly: 200-Week Moving Average and Investment Cost Basis

  • “After closing above the 200-week moving average in July, the price of 1 bitcoin reversed and fell below it in August. Currently at $22,680, the 200-week moving average now appears to be meeting resistance.

The center did not last. The price recovery was short-lived. Markets are red across the board and bitcoin is no exception. At the time of writing, bitcoin is trading at $19,874. For those keeping score, that’s just below the all-time high of $20K from the previous cycle. Something that shouldn’t happen, but a few degrees of error is always understandable.

  • “Bitcoin is currently trading above investor costs at $19,360, the strongest on-chain support level (…) Importantly, in the history of bitcoin trading at investor price usually marks a low.”

Times are tough, but bitcoin is still trading above investor costs. The Bitcoin Monthly clarifies: “The price to investors is calculated by subtracting the cost base of miners from the overall cost base of the market.” As we see it, The Bitcoin Monthly is calling the bottom. They didn’t say it in those exact words, but they certainly insinuated it.

Is the bottom really there?

Bitcoin Cost Basis
.Bitcoin Cost Basis
BTC price chart for 09/17/2022 on Gemini | Source: BTC/USD on

The Bitcoin Monthly: Short-Term Holder vs. Long term holder

  • “The short-term holder (STH) cost base is approaching the long-term holder (LTH) cost base, an event that has marked cyclical bottoms in the past. (…) Since the end of July, the short-term and long-term cost basis has shrunk from $5,840 to $2,500”

The Bitcoin Monthly sees it as a sign that “the market is typically capitating and returning to long-term participation.” Bitcoin’s consolidation process may end soon. However, we could stay in the lower section for a while. That has happened before. The thing is, all the indicators that The Bitcoin Monthly highlighted this month are pointing in the same direction. To the bottom.

  • “The long-term supply of bitcoin holders is 34,500 coins away from reaching 13.55 million – its all-time high. The long-term supply makes up 70.6% of the total outstanding supply.

This one is the most bullish of all the featured stats. To clarify, coins that have not moved in 155 days or more qualify as “long-term stock.” The tourists and the people with high expectations left long ago. And the lion’s share of the bitcoin supply is now in the possession of the true believers. A remarkable situation that is not mentioned often enough.

About The Ethereum Merge

  • “In August, ether outperformed bitcoin by 7.6% (…) Historically, ether has outperformed bitcoin during “riskon” bull markets and underperformed during “risk-off” bear markets.”

The effects of the merger affected the market throughout the story. Although we are in a “risk-out-bear market”, ETH took over and led the market there for a while. They accomplished the mythical feat and… the market turned against them. After what appeared to be a successful mission, the price of ETH started to bleed.

Hidden behind a secret door, that’s what The Bitcoin Monthly featured.

Featured Image by Maxim Hopman on Unsplash  | Charts by TradingView

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