• On-chain data reveals that the average Bitcoin short-term holder is back in profit with BTC’s sharp upwards momentum.
• The realized price, derived from the concept of the realized cap, is significant because it represents the average cost basis of the Bitcoin market.
• If the regular price sinks below the realized price, it is fair to conclude that the average investor is holding at a loss.
The recent upswing in Bitcoin’s price has been nothing short of remarkable. After a few days of uncharacteristically low volatility, the asset has surged in value, reaching levels not seen since the end of February. This surge has been a boon for many Bitcoin holders, but has it been enough to put short-term holders back in the black? On-chain data from the analytics firm Glassnode reveals that the answer is yes.
The “realized price” of Bitcoin is an indicator that reveals the average cost basis of coins in the Bitcoin market. It is derived from the concept of the “realized cap,” which is a capitalization model that aims to find the “true” value of Bitcoin by taking into account the price at which each coin was last transferred. If the market cap (calculated by multiplying the price by the total number of coins) is divided by the total number of coins in circulation, the “realized price” can be obtained.
This indicator is significant because it reveals the average cost basis of the short-term holders in the Bitcoin market. If the regular market price sinks below the realized price, it is fair to conclude that the average investor is holding at a loss. Fortunately, with Bitcoin’s recent surge in price, the realized price is now above the regular market price, meaning that the average Bitcoin short-term holder is back in the black.
The increase in Bitcoin’s price is certainly something to be celebrated, but it is important to remember that market conditions can change rapidly. Investors should always be aware of the risks associated with investing in cryptocurrency and should not risk more than they can afford to lose.