Cost Basis, Long-Term Holders, And The Cyclical Bottom


in this month Bitcoin monthlyARK Invest focused on Ethereum and Merge. As a side dish, they’ve posted some excellent, review-worthy stats that we’re about to cover. Regardless of the market, the Bitcoin network continues to produce block by block regardless. However, the statistics produced by this entire activity can be important in understanding the market.

This is where ARK Invest’s Bitcoin Monthly comes in. The post defines itself as an “earnings report” that details on-chain activity and showcases the openness, transparency, and accessibility of blockchain data. So, the data we’re about to cover is why Bitcoin Monthly exists.

Bitcoin Monthly: 200-week Moving Average and Investor Cost Basis

  • “After closing above its 200-week moving average in July, bitcoin price reversed and fell below it in August. Currently at $22,680, the 200-week moving average now appears to be resistance.”

The center could not stand it. The price rebound was short-lived. Markets are red across the board and Bitcoin is no exception. At the time of writing, Bitcoin is trading at $1,874. For those keeping score, this is just below the all-time high of the last cycle of $20,000. Something that shouldn’t happen, but a few degrees of error are always understandable.

  • “Bitcoin is currently trading above the investor cost basis at $19,360, which is the strongest support level on the chain (…) and most importantly, in the history of Bitcoin, trading at the investor price has usually represented the process of hitting the bottom.”

Times are tough, but bitcoin is still trading above an investor’s cost basis. Bitcoin Monthly explains, “The investor price is calculated by subtracting the cost basis of miners from the general cost basis of the market.” As we can see, the monthly bitcoin is calling for a bottom. They didn’t say it exactly with those words, but they definitely pointed it out.

Is the bottom really there, though?

BTCUSD Price Chart for 09/17/2022 - TradingView

BTC price chart for 09/17/2022 on Gemini | Source: BTC/USD on TradingView.com

Bitcoin monthly: short term holder vs. long-term pregnant

  • The short-term bearer cost basis (STH) approximates the long-term bearer cost basis (LTH) – an event that has marked cyclical bottoms in the past. (…) Since the end of July, the difference between the short- and long-term cost basis for shareholders has shrunk from $5,840 to $2,500”

Bitcoin Monthly sees it as a sign that “the market usually gives up and turns back into long-term engagement.” Bitcoin consolidation may end soon. We can stay for a while in the lower zone. It’s happened before. The point is that all indicators point Bitcoin monthly this month in the same direction. Down.

  • “The long-term supply of bitcoin holders is 34,500 coins, far from reaching an all-time high of 13.55 million. Long-term supply makes up 70.6% of the total supply outstanding.

This is the most upside of all the featured stats. For clarity, coins that have not moved in 155 days or more qualifies as a “Long Term Bearer Supply”. Tourists and those with high hopes left long ago. The lion’s share of the Bitcoin supply is now held by true believers. A wonderful condition that is not mentioned enough.

About Ethereum Integration

  • “In August, Ether outperformed Bitcoin by 7.6% (…) Historically, Ether has outperformed Bitcoin during “risk-free” bull markets and underperformed during “risk-free” bear markets.

The effects of the merger affected the market throughout the entire narrative. Even though we are in a “bear market of risk”, ETH has captured the market and led the market for a while there. They accomplished the legendary feat and…the market turned against them. After what looked like the job had been done, the price of ETH started bleeding.

Hidden behind a secret door, this is what The Bitcoin Monthly contained.

Featured Image by Maxim Hopman on Unsplash  | Charts by TradingView



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