On-chain data shows that Bitcoin has broken above these three key levels in a manner reminiscent of the April 2019 rally.
Bitcoin Breakout Shows Initial Similarities to April 2019 Rally
According to data from the chain analysis firm Glass snood, BTC has broken above the three investor cost levels for the first time since the fall of COVID-19 and the bear market of 2018-2019. The relevant indicator here is the «realized price,» to understand the concept of «realized cap» it must be looked at first.
The realized cap for Bitcoin is a capitalization model that assumes that each coin in the circulating supply has its true value as the price at which it was last transferred rather than the current BTC price (which the normal market cap uses to calculate it).
Now, from the realized limit, a «realized price» can be obtained by dividing the metric by the total number of coins in circulation. Since the realization limit was the prices at which investors bought their coins (that is, their cost basis), the realization price can be thought of as the average acquisition price in the market.
This means that if the normal price of Bitcoin falls below this indicator, it can be assumed that the average holder has entered a state of loss. Although this realized price is the average cost for the entire market, the metric can also be defined only for specific groups of investors.
The BTC market can be divided into two primary cohorts: short-term holders (STHs) and long-term holders (LTHs). Investors who bought their coins within the last 155 days fall into the STHs, and those before that threshold are included in the LTHs.
Here’s a chart showing the trend in Bitcoin’s realized price for the entire market, as well as for these two groups of holders separately, over the past few years:
BTC seems to have broken above all these levels recently | Source: Glassnode on Twitter
As the graph above shows, Bitcoin had broken above the STH cost base and the realized price of the entire market earlier in the most recent rally, suggesting that the STH average and the overall average investor were back in profit.
In continuation of the latest rally, the crypto has now risen above the LTH cost base of $22,400. This means that the average investor in each segment is now in the lock.
The last time Bitcoin showed a breakout above all of these levels was after the COVID-19 black swan crash, which briefly took the coin under these prices.
A similar trend also met in April 2019, when the bear market of that cycle ended, and a bullish transition took place. Although it is too early to tell at the moment, the similarity between the two rallies could hint at the path that the current one could follow as well.
At the time of writing, Bitcoin is trading around $22,900, up 8% over the past week.
Looks like BTC has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com