On-Chain data suggests that the $33,700 level for Bitcoin could be a crucial level to break if historical patterns are anything to go by.
In a recent post on X, analyst Ali shared a chart that could shed light on the potential path Bitcoin could take. The relevant indicator here is the “realized price,” which gives us information on the price at which the average investor in the Bitcoin market acquired their coins.
If the asset’s cash price surpasses this threshold, it means that holders, as a whole, currently have a net profit on their coins. Conversely, if BTC is below this level, it indicates that the average investor is currently underwater.
In the context of the current discussion, it’s not the cost basis of the entire market that’s relevant, but rather that of a specific segment: the holders who acquired their coins at least six months ago and no longer than three years ago.
Here is a chart showing how the cost basis of these Bitcoin investors has changed over the years:[Chart]
It appears that the price is currently below this line | Source: @ali_charts on X
The six-month to three-year-old investors actually belong to the larger group of “Long-Term Holders” (LTHs). And LTHs are simply the investors who have held their coins for at least six months.
In the chart, the analyst also included the data for the cost basis of the entire LTH group, and it is apparent that this metric currently stands at around $20,300, meaning that the spot price is currently well above this line.
However, the realized price of the six-month to three-year-old holders is currently above the spot price, estimated at around $33,755. This naturally means that this segment of LTHs is currently deep in the red.
The chart also reveals that Bitcoin has not reached this level since the beginning of the bear market in early 2022. If the cryptocurrency can reach and eventually retest this level, its fate could turn for the better.
This is because, as Ali emphasized, each time the asset surpasses this mark, it experiences a significant recovery, resulting in profits for these HODLers.
Three examples of this pattern are clearly visible in the chart. The bull run in 2017, the rally in April 2019, and the bull run in 2021 all stemmed from successful breakthroughs of the cost basis of the six-month to three-year-old LTHs.
If this historical pattern holds any weight, a breakthrough by Bitcoin above the $33,700 level in the near future could be the starting point for the next major bull run.
Currently, Bitcoin is well below the cost basis of these LTHs, with its price just below the $25,800 level.[Chart]
BTC continues to show dull price movements | Source: BTCUSD on TradingView. Featured image by Kanchanara on Unsplash.com, charts by TradingView.com, Glassnode.com.