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Bitcoin price has been somewhat quiet since its all-time high of $108,135, struggling to maintain a six-figure valuation for long. Case in point: The leading cryptocurrency barely lasted a day above $100,000 before crashing below $92,000 last week.
This sluggish price action has led to discussions about the likelihood that there will be a top and the Bitcoin bull market is over. However, the latest on-chain observation suggests that the flagship cryptocurrency still has room for further upward price movement.
What is the current cost basis for Bitcoin short-term holders?
In its latest post on the X platform, blockchain analytics company Glassnode says revealed that the Bitcoin bull market may not be over yet. This on-chain observation is based on the movement of the BTC price in relation to the Short-Term Holder Cost Basis (STH).
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The STH cost basis metric tracks the average price at which short-term holders (investors who have held Bitcoin for less than 155 days) purchased their coins. It represents a psychological level for BTC investors and could serve as a technical point for analyzing prices, especially during bull cycles.
Typically, Bitcoin’s price hovers above the STH cost basis during bull markets, indicating significant buying interest and positive sentiment from short-term traders. Conversely, when the BTC price falls below this level – as is often seen in bear markets – it means newer investors are in the red, leading to significant selling pressure.
According to data from Glassnode, Bitcoin’s price is about 7% above the STH cost basis, which is currently around $88,135. Although the leading cryptocurrency is a little closer to cost basis, there is still the suspicion that short-term holders will be less likely to lose their assets.
If Bitcoin’s price manages to stay above the STH cost basis, it will signify the potential continuation of the current bull market. On the other hand, a move below $88,000 could set the stage for a trend reversal, with the market shifting from a bull to a bear phase.
At the time of writing, the price of BTC is just above $94,000, reflecting a rise of just 1% in the past 24 hours. According to data from CoinGecko, the leading cryptocurrency has fallen more than 3% over the past seven days.
Is a market recovery imminent?
The crypto market has been in terrible shape over the past week, with several large-cap assets down double digits. It is not surprising that many crypto traders have shown interest in transferring their assets on various social media platforms.
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However, this shift in investor sentiment increases the chances of a market recovery as prices tend to move in the opposite direction. On-chain intelligence firm Santiment noted in a message on X that this was the case during the Q4 2024 rally, when higher prices followed increasing bearish mentions.
Featured image from iStock, chart from TradingView