On-chain data shows that Bitcoin has broken above these three key levels in a manner reminiscent of the April 2019 rally.
Bitcoin Breakout shows initial similarities to the April 2019 rally
This is evident from data from the on-chain analytics company Glasnode, BTC has moved above the three cost base levels for investors for the first time since the COVID-19 crash and 2018-2019 bear market. The relevant indicator here is the “realized price”, to understand the concept of “realized cap“It needs to be looked at first.
The realized limit is a capitalization model for Bitcoin that assumes that each coin in the circulating supply has its true value as the price at which it last moved rather than the current BTC price (which uses the normal market cap for the calculation) .
Now, from the realized cap, a “realized pricecan be obtained by dividing the metric by the total number of coins in circulation. Since the realized limit represented the prices at which investors bought their coins (i.e. their cost basis), the realized price can be thought of as the average purchase price in the market.
This means that if the normal price of Bitcoin drops below this indicator, it can be assumed that the average holder has entered a state of loss. While this realized price is the average cost basis for the entire market, the measure can also be defined for specific groups of investors only.
The BTC market can be divided into two primary cohorts: short-term holders (STHs) and long-term holders (LTHs). Investors who bought their coins in the last 155 days fall into the STHs, while those who already own them before that threshold are included in the LTHs.
Here is a chart showing the trend in Bitcoin’s realized price for the entire market, as well as these two holder groups individually, over the past few years:
BTC seems to have broken above all these levels recently | Source: Glassnode on Twitter
As the chart above shows, Bitcoin had broken above the STH cost base and the realized price of the entire market earlier in the latest rally, suggesting that the average STH and the average investor was returning to profit.
In the most recent continuation of the rally, the crypto has now moved above the $22,400 LTH cost base. This means that the average investor in each segment is now in the green.
The last time Bitcoin broke above all of these levels was after the COVID-19 black swan crash, which briefly pushed the coin below these prices.
A similar trend also occurred in April 2019, when the bear market of that cycle ended and a bullish transition took place. While it’s early to say at this point, this similarity between the two rallies could hint at the path the current one might take as well.
BTC price
At the time of writing, Bitcoin is trading around $22,900, up 8% over the past week.
Looks like BTC has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com