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.

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📘 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.”

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🧠 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

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📊 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

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💡 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.

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🟠 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

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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.

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