One analyst explained how the important Bitcoin indicator is returning to levels that could be considered healthy for a market uptrend.
Short-term holders of Bitcoin realized that the price was no longer growing very quickly
In new mail On Day “Price Realized” here refers to an on-chain metric that tracks the cost basis of the average investor or address on the network.
When the index value is greater than the spot price of the cryptocurrency, it means that its holders as a whole can be assumed to be in a state of net profit. On the other hand, being below the mark means that the overall market is holding a loss.
In the context of the present topic, the realized price of only a specific segment of the market is of interest: short-term holders (STHs). This group includes investors who have purchased their coins within the past 155 days.
STHs make up one of the two main segments of the BTC sector based on hold time, while the other group is known as Bitcoin Long Term Holders (LTHs).
Statistically speaking, the longer an investor holds their coins, the less likely they are to ever sell them, so STHs are considered to include weak hands in the market, while LTHs represent firm HODLers.
Now, here’s the chart shared by the analyst that shows the trend in the realized price of STH, as well as its 7-day rate of change, over the past few years:
The 7-day rate of change in the metric appears to have gone down in recent days | Source: @btcjvs on X
As can be seen in the chart above, the realized price of Bitcoin STH has risen over the past few months as a rally in the coin’s price has occurred. The reason behind this trend is of course the fact that STHs represent new buyers, who have to buy at increasingly higher prices during the bullish period.
The cryptocurrency has been trading above this group’s cost basis for a while, meaning its members have been enjoying the profits. Historically, the line has served as a sort of boundary between overall bearish and bullish trends, so BTC continuing to trade above it is a positive sign.
As van Straaten pointed out, another potential bullish signal is the fact that the index’s 7-day rate of change has seen a period of slowdown recently. Earlier, the realized price of STH was expanding at a noticeable rate, which generally drove the coin higher.
With the index now growing at a healthier rate, it is possible that Bitcoin will continue its rise in a sustainable manner.
Bitcoin price
At the time of writing, Bitcoin is trading around $98,400, down more than 6% over the past week.
Looks like the price of the coin has shot up over the past day | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com