How a change in this Bitcoin metric could signal a bull run

By AMBCrypto September 06, 2023 In Bitcoin
  • The current Bitcoin average cost basis was around $33,755.
  • At press time, BTC was trading at around $25,700.

Many metrics have been employed in attempts to predict when the Bitcoin bull run will start. Nevertheless, a recent analysis suggests that it may not occur until a specific price range is reached.

Read Bitcoin’s [BTC] Price Prediction 2023-24

Bitcoin average cost basis

A recent update by Ali Charts showed that a historical pattern has been observed in Bitcoin’s bull runs, typically triggered when the price reaches a specific threshold based on certain metrics. According to the post, this threshold was typically when the price surpassed the average cost basis of Bitcoin holders with a track record spanning six months to three years.

The chart highlighted in the post indicated that the current cost basis for Bitcoin was approximately $33,755. The average cost basis is a crucial metric that signifies the average price at which Bitcoin holdings have been accumulated over a period. To compute it, one adds the total amount spent on purchasing Bitcoin and then divides this figure by the total quantity of BTC owned.

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This metric holds immense importance in assessing the profitability of a Bitcoin investment and guiding decisions regarding the buying or selling of BTC. It naturally directs focus toward the prevailing price trend as well.

Comparing the current BTC trend with the long-term cost basis

As of this writing, Bitcoin traded at around $25,800 when analyzed on a daily timeframe chart. It was experiencing a slight loss, though it remained below 1%.

Examining the historical price trend over the same timeframe revealed that the highest price it had reached throughout the year was approximately $31,000. This observation suggested that, so far this year, the price has yet to manage to reach the cost basis highlighted in the earlier post.

Source: TradingView

Additionally, it was evident that the declining price trend had led to the short-moving average (yellow line) trending downward. Furthermore, there was a potential for a “death cross” to occur if the price continued its downward trajectory.

Syncing the Bitcoin long-term MVRV with the current bear trend

Comparing the Market Value to the Realized Value (MVRV) ratio over different timeframes, namely the 180-day, 365-day, and two-year periods, yielded distinct outcomes.

The 365-day MVRV indicated a potential for profitability at 4.2%. However, the 180-day and two-year MVRV ratios revealed losses. Specifically, the 180-day MVRV stood at approximately -8%, while the two-year MVRV was around -11%.

Source: Santiment

– How much are 1,10,100 BTCs worth today

Except for the 180-day MVRV, these metrics were in sync with the prevailing bearish trend in Bitcoin’s performance. They highlighted how profitability in these metrics could serve as an indicator for an impending bull run.

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