Bitcoin (BTC) Price Is Still At A Notable Gap From Short-Term Holder Cost Basis

In a new post on X, the on-chain analytics firm Glassnode has discussed the trend in the profit-loss status of the Bitcoin short-term holders.

The price of Bitcoin has shown to be stalling at a key level that could be signaling an upcoming sell-off from a particular group of the market.

What Is The Bitcoin Short-Term Holder Cost Basis Right Now?

Yesterday, BTC briefly dropped below the $92,000 level, but the cryptocurrency has since found a small rebound and is now trading around the $94,500 price point.

Despite the recent slowdown in the rally, Bitcoin is still up by an impressive 120% year-to-date performance. This uptrend has put a spotlight on the profit-loss status of different investor cohorts in the market.

One way to gauge the average cost basis of the market is to use the Market Value to Realized Value (MVRV) Ratio. This indicator compares the market capitalization of an asset to its realized capitalization.

The realized capitalization is an on-chain price model that assumes the “real” value of each token in circulation is the price at which it was last transacted on the blockchain.

Since the last transfer of any coin is likely to correspond to the last instance of it changing hands, the price at its time could be considered as its current cost basis. Thus, the realized cap is nothing, but the sum of the capital that the investors as a whole have used to purchase the cryptocurrency.

In contrast, the market capitalization represents the value that the holders are carrying right now. Comparing these two models gives us an idea of the average profit or loss in the network.

The traditional MVRV Ratio measures this for the entire market, but a version of the metric that is of interest in the current topic is that specifically for the short-term holders (STHs), investors who purchased their coins within the past 155 days.

Below is a chart shared by the analytics firm Glassnode that shows the trend in the Bitcoin STH MVRV Ratio over the past year or so.

The average cost basis of the Bitcoin short-term holders (STHs) is currently at $86,800.

Bitcoin STH MVRV Ratio Shows Profits Held By Cohort Still Outweigh Losses

As you can see in the graph, the Bitcoin STH MVRV Ratio spiked to notable levels above the 1 mark when the recent leg up in the BTC rally took place. The indicator being above this value implies the market cap of the group is greater than its realized cap, and so, the average member is in a state of profit.

Recently, as the decline in the cryptocurrency’s price has occurred, the indicator has naturally gone down. Its value still remains above the 1 level, though, suggesting profits held by the cohort still outstrip the losses.

At present, the STH MVRV Ratio is sitting at 1.08, which corresponds to the group holding unrealized gains of around 8%. Historically, the STHs have shown to represent the fickle-minded side of the market that easily participates in selloffs, so their being in large profits has tended to be a danger sign for the price.

The cohort is no longer making significant profits after the drawdown, but perhaps a cooldown may need to happen if the risk of profit-taking has to go away. A metric that makes it convenient to track when this could happen is the “Realized Price,” which is derived from the realized cap by dividing it with the total number of tokens in circulation.

From the chart, it’s visible that the STH Realized Price has a value of $86,800 right now, which means the group will be just breaking-even on its investment if Bitcoin falls to this level.