A Cheatsheet for Bitcoin Price Based on On-Chain Indicator
A cycle analyst has shared a helpful chart that breaks down the different phases of Bitcoin’s price over its 4-year cycles. The analyst used an on-chain indicator called the “short-term holder cost basis” to distinguish between bullish and bearish periods.
Understanding Short-Term Holders and Cost Basis
Short-term holders (STHs) are the investors in the BTC market who frequently buy and sell. The cost basis, or realized price, is the average price at which these investors acquired their coins.
If the spot price falls below this value, it suggests that STHs may be experiencing losses, while a break above the cost basis indicates that they have returned to a state of profit.
The Bitcoin Cheat Sheet
The chart shared by the analyst displays the cheat sheet for Bitcoin based on the cost basis of STHs. It uses the Z-score of the STH cost basis, which measures how far away the indicator’s value is from its mean.
Green values indicate a bull market, while red values represent a bear market. Interestingly, throughout most of Bitcoin’s existence, the peaks of bull markets and bottoms of bear markets have occurred relatively close to each other.
Interpreting Bull Markets and Bear Markets
In bull markets (green dots), STHs participate in significant buying at high prices. In bear markets (red dots), they sell their coins at losses, which are then picked up by other investors at low prices.
The Current Phase: Disbelief
According to the chart, Bitcoin is currently in the “disbelief” phase, where investors are skeptical about the longevity of the current rally. If previous cycles are any indication, the BTC bull run for the current cycle may not kick off properly until 2025.
Bitcoin Price Update
Bitcoin has recently surpassed the $44,000 mark, experiencing a 3% uplift in the last 24 hours.
Hot Take: Analyzing Bitcoin’s Price Patterns and Future Projections
By examining Bitcoin’s price patterns over its 4-year cycles and using on-chain indicators such as the short-term holder cost basis, analysts can gain insights into market phases and potential future developments. The cheat sheet provided by the cycle analyst demonstrates how the peaks of bull markets and bottoms of bear markets have historically occurred closely together.
Currently in the “disbelief” phase, Bitcoin may still have some time before its next significant bull run begins. As investors navigate this market, it’s important to consider historical trends while also recognizing that each cycle may have unique characteristics. With Bitcoin’s price surpassing $44,000, the cryptocurrency continues to attract attention and speculation as its future trajectory remains uncertain.
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