On-chain data suggests the $33,700 level could be a very significant level to break for Bitcoin if the historical pattern is anything to go by.
Bitcoin 6 Months To 3 Years Old Investors Have $33,700 As Cost Basis
In a new post on X, Ali, an analyst, has shared a chart that could shed light on the path that BTC may end up taking. The relevant indicator here is the “realized price,” which tells us about the price at which the average investor in the Bitcoin market acquired their coins.
Related Reading: Bitcoin Exchanges See Three Straight Months Of Withdrawals For First Time Ever
When the spot price of the asset exceeds this line, it means that the holders as a whole are currently carrying a net amount of profit on their coins. On the other hand, BTC being below the level suggests the average investor is underwater right now.
In the context of the current discussion, the cost basis of the entire market isn’t of relevance, but of only a specific segment: the holders who acquired their coins at least six months and at most three years ago.
Here is a chart that shows how the cost basis of these Bitcoin investors has changed over the years:
Looks like the price is below this line at the moment | Source: @ali_charts on X
The six months to three years old investors are actually a part of the larger “long-term holder” (LTH) group. And the LTHs are simply the investors who bought their coins at least six months ago.
In the chart, the analyst has also attached the data for the cost basis of the entire LTH group and it’s visible that this metric currently has a value of about $20,300, meaning that the spot price is currently a decent distance above this line.
The realized price of the six months to three years old holders, however, is above the spot price right now, as it’s valued at about $33,755. Naturally, this means that this segment of the LTHs is currently firmly in the red.
From the graph, it’s also apparent that the Bitcoin price has not touched this level since early 2022, when the bear market first kicked off. If the cryptocurrency can surge towards the level and finally make a retest of it, then its fate might change for the better.
This is because, as Ali has pointed out, BTC has observed a significant rally whenever the asset has crossed this mark and these HODLers have gotten back into profits.
Three instances of this pattern are clearly visible in the chart. The 2017 bull run, the April 2019 rally, and the 2021 bull run all emerged from successful breaks of the cost basis of the six months to three years old LTHs.
If this historical pattern holds any weight at all, then a Bitcoin break above the $33,700 level in the near future could become the starting point of the next major bull run.
At present, Bitcoin is quite a bit below the cost basis of these LTHs, as its price is trading just under the $25,800 level.
BTC continues to show boring price action | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com