Bitcoin (BTC) Price May Have Found a Bottom, On-Chain Data Suggests

According to a recent report from Glassnode, Bitcoin reached its recent low near the cost basis of “active investors.”

On-chain data suggests that Bitcoin’s recent price bottom may be due to a key investor cost basis level being hit, according to a report by Glassnode.

To understand this important level, we need to look at two key indicators: the Realized Price and Liveliness.

The Realized Price represents the average acquisition price of all investors in the Bitcoin network. This metric calculates the cost basis by analyzing the transaction history of each Bitcoin in circulation to determine the last price at which it moved. The assumption is that the previous transfer was the last time the coin changed hands, and so, its price at that time reflects its current cost basis. This value is then averaged across the entire supply, providing a measure often considered Bitcoin’s “fair value.”

Liveliness, the second indicator, monitors the spending and holding behavior of investors. This metric uses the concept of “coin days,” which accumulate as 1 BTC stays dormant on the blockchain for a single day. When holding occurs, new coin days are created each day, while spending destroys previously accumulated coin days. Liveliness measures the ratio of coin days destroyed to those created throughout Bitcoin’s history. When the market predominantly holds, the metric leans towards zero; it tends towards one when distribution is high.

The primary indicator in focus here is the Realized Price-to-Liveliness Ratio, also known as the Active Investor’s Cost Basis. This ratio adds a weighting factor to Bitcoin’s Realized Price using Liveliness. The fair value of Bitcoin is estimated higher when holding is dominant and lower when distribution is occurring.

A recent chart from Glassnode reveals the trend of this ratio over the past decade. The Realized Price-to-Liveliness Ratio currently stands at $51,300. In the recent market crash, Bitcoin found a bottom close to this value.

Glassnode noted, “The Active Investor’s Cost-Basis can be considered a key threshold delineating bullish and bearish investor sentiment. That the market found support near this level indicates underlying strength, suggesting investors generally remain optimistic about positive market momentum in the short-to-medium term.”

Bitcoin has seen a nearly 4% increase in the last 24 hours, pushing its price above $61,000, indicating a possible rebound after the recent dip.

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