Investors who acquired Bitcoin 5 months ago are guaranteed their profits

Bitcoin Price Outperforms Short Term Holders on Average Cost Basis: Understanding Realized Price by Maximum Realized Model

According to the sequential analysis of glass knotBitcoin’s current price is above the average cost to short-term holders. The main indicator here is the “achieved price”, which is derived from the concept of “achieved limit”.

Realized cap is a valuation methodology for bitcoin that seeks to determine the “true” value of a cryptocurrency, using the price at which the currency was last converted rather than the current price (as with traditional market value).

When the traditional market cap is divided by the total number of coins in circulation, it is possible to get the price of bitcoin (which is not surprising since the market cap is calculated by multiplying the price by the total number of coins). If the same technique is used for the achieved limit, it is possible to obtain a ‘realized price’.

This price is important because it reflects the average cost (i.e. the price at which the average investor bought his coins) in the Bitcoin market. This means that if the price falls below the achieved price, it is reasonable to conclude that the average investor is making a loss.

The bitcoin market is generally divided into two groups of investors: “Short-Term Investors” (STHs) and “Long-Term Investors” (LTHs). STHs include everyone who bought their coins within the last 5 months (155 days to be exact) while anyone who has held coins longer than that is classified as LTH.

Below is a graph showing the evolution of realized price for the market as a whole, as well as for these two groups of investors separately, over the past few years:

As shown in the chart above, Bitcoin surpassed the short-term investors’ price of $17,800 in the latest price rally, which means that the average investor who bought in the past five months is now making a profit. On the other hand, the average long-term investor can still see a loss because their average cost is over $20,000.

According to CoinMarketCap, at the time of writing this article, Bitcoin is trading at $20,746, up 7.51% over the past 24 hours and up 22.47% from the previous week.