The Daily Dive #135 - LTH And STH Cost Basis Update

LTH And STH Realized Price

Yesterday, we discussed some of the current on-chain cost basis looking at realized price and realized market capitalization. Today, we wanted to continue some of that analysis highlighting the latest long-term holder and short-term holder realized price (cost basis). We will be rolling out some new Deep Dive custom charts so feel free to let us know your feedback as we continuously improve them. 

The current short-term holder cost basis has been a key price support to watch over the last couple months as it’s dropped from nearly $53,000 to $49,986. Price below the short-term cost basis is a fairly cautious market sign as recent market buyers are down 15.5% on average. During the summer of 2021, price sustained below the short-term holder cost basis for nearly three months. 

At the same time, we’re seeing little movement in the long-term holder realized price with almost no change since November. A rising long-term holder realized price is typically a bullish sign with long-term holders selling older coins with a lower cost basis. 

A better way to view this relationship in tandem is using the Short-Term:Long-Term Cost Basis Ratio. We discuss the ratio more in-depth in The Daily Dive #103 - Short-Term Holder Dynamics. 

As the short-term holder cost basis has fallen and the long-term holder cost basis has remained fairly neutral, the ratio is showing some signs of a potential uptrend. An upward-sloping ratio is a more bearish market sign. 

Below, we highlight when the 14-day change in the ratio is accelerating or decelerating. Dark blue shows when the STH cost basis is increasing relative to the LTH cost basis. Red shows when the LTH cost basis increases relative to the STH cost basis. Historically this has been a quality signal to assess tops and bottoms. 

Short-term holders account for 18.23% of outstanding circulating supply, a figure that is near five-year lows, with 93% of said short term holders currently sitting in loss. 

Conversely, long-term holders account for 81.77% of circulating supply.

The supply squeeze style dynamics still exist, but the capital flows into the asset must increase in absolute terms before that unfolds, as highlighted in yesterday's Daily Dive. 

Zooming back out to the total market, the Market Value Realized Value (MVRV) Z-Score has been one of the key cycle indicators to gauge when bitcoin price is too overheated or too cooled down. 

When breaking down the indicator’s historical data into different percentiles, we can visually show the stages of the market as told by MVRV. For example, the dark green in the below chart is when the MVRV Z-Score is below its 15th percentile. The dark red is when the metric is above the 98th percentile. The neutral state today is just above the 50th percentile and below the 85th. 

Assigning these colors and percentile criteria is a subjective process but can give us good insights into generational buying opportunities. We will be rolling out a similar analysis for key cycle on-chain indicators in the future.