Understanding Bitcoin’s Long/Short-Term On-Chain Cost Basis: A Powerful Tool for Market Analysis

In crypto trading, timing matters — but so does understanding who’s buying, who’s holding, and at what price. That’s where the Long/Short-Term On-Chain Cost Basis comes in — a powerful on-chain metric that provides deep insight into market sentiment and potential turning points.

Think of Bitcoin holders like residents of a city:

🧓 Long-Term Holders (LTHs) are the seasoned veterans — they’ve weathered multiple market cycles.
🧑‍🚀 Short-Term Holders (STHs) are newcomers — more reactive, more sensitive to price changes.

Let’s explore how this metric works and why it’s valuable for traders and investors.

📘 What Is the Long/Short-Term On-Chain Cost Basis?

The Long/Short-Term On-Chain Cost Basis is an advanced on-chain indicator that shows the average acquisition price (cost basis) for two groups:

LTH (Long-Term Holders): Holding BTC for over 155 days
STH (Short-Term Holders): Holding BTC for 155 days or less

These values are calculated using Realized Price — the average price at which coins were last moved on-chain.

🔍 Why 155 Days?

Data shows that coins held for more than 155 days are statistically less likely to move — indicating stronger conviction or “diamond hands.”

🧠 What Is Realized Price?

Realized Price = Total USD value of all coins at the time of last movement ÷ circulating supply.

Different types:

🔴 STH Realized Price: Average price paid by recent buyers (highly reactive to volatility)
🔵 LTH Realized Price: Average cost basis of long-term holders (signals long-term sentiment)
🟠 Aggregate Realized Price: Network-wide average

📊 How to Read the Long/Short-Term Cost Basis Chart

Chart Breakdown:

Line Color	Metric	Description
⚫ Black	BTC Spot Price	Current market price of Bitcoin
🔴 Red	STH Realized Price	Cost basis of recent buyers (holding <155 days)
🔵 Blue	LTH Realized Price	Cost basis of long-term holders
🟠 Orange	Aggregate Realized Price	Average for all BTC holders
🟣 Purple	Capitulation Zone	BTC below all cost bases = undervaluation risk

Key Insights:

✅ BTC above all cost bases = Bullish structure
⚠️ BTC below STH cost basis = Weak hands may sell
🔻 BTC below LTH cost basis = Market-wide pain or capitulation
📈 Rising STH cost basis = Retail buying pressure
💎 Steady LTH cost basis = Strong HODLing sentiment

💡 Why This Metric Matters for Crypto Traders

This metric helps you:

🔄 Spot Market Cycle Phases

Capitulation zone: BTC trades below both STH and LTH cost basis
Bullish momentum: BTC stays above both cost bases
Trend shifts: Crossovers or rapid shifts in STH/LTH prices may hint at macro changes

📉 Identify Support and Resistance Levels

Cost bases often act as psychological support or resistance.
STH realized price can cap rallies or offer support in uptrends.
LTH realized price is a key long-term support level during corrections.

📣 Gauge Sentiment by Holder Group

STHs are prone to emotional trading and quick exits.
LTHs signal institutional sentiment, long-term conviction, and often accumulate in bear markets.

🟠 Summary Table

Metric	Signal Type	Market Implication
BTC < All Realized Prices	Capitulation Zone	Potential market bottom / accumulation
BTC > All Realized Prices	Profit Zone	Bullish continuation
STH Cost Basis Rising Rapidly	Retail Buying Spike	Risk-on sentiment, possible late-stage bull
LTH Cost Basis Stable/Rising	Strong Hands Accumulating	Long-term confidence, trend support

Final Thoughts

Tracking on-chain cost basis gives you a powerful advantage in understanding market cycles, spotting key support/resistance zones, and separating hype from real conviction.

As of June 2025, Bitcoin trades above all major realized prices — suggesting a structurally bullish market with strong demand from both new and seasoned investors.

Use this metric alongside others like NUPL, SOPR, and MVRV to sharpen your trading edge.

Stay Educated with Daily Forex Pakistan.

Yasher Rizwan