Bitcoin: The Cost Basis metric, also known as realized price, is divided into long-term holder (LTH) and short-term holder (STH) cohorts.
cost base is Cumulative fair market value of acquired cryptocurrency tokens and profit on sale. It is commonly used to calculate tax liability by determining whether a gain or loss occurred during the holding period.
LTH is defined as tokens held for 155 days or more and STH is defined as tokens held for 154 days or less.
Bitcoin: cost-based metrics
Analysts use the LTH/STH ratio to determine bullish and bearish cycles, or market troughs and highs. If the ratio is:
- Upward trend: STH realizes loss at a higher rate compared to LTH. This situation is associated with bear market accumulation.
- Downtrend: LTH consumes tokens and transfers them to STH. This usually happens during bull market circulation.
- Trading > 1.0: The LTH cost base is higher than the STH cost base, representing the late stage of bear market capitulation.
Historically, when the ratio is less than 1, the market has reached the bottom. Currently, the realized price of STH is starting to fall below the realized price of LTH, indicating that short-term holders are losing confidence.
However, the market bottom could be many months before the upward trend in prices is reflected. This situation has happened to him only three times in the past.
DXY is up 6% since early September, and the continued strength of the dollar will put more pressure on the risk-on market in the short term.
