Bitcoin has achieved a breakthrough that has historically led to rallies of more than 99%. On-chain data indicates that Bitcoin has recently surpassed the cost basis of single-cycle long-term holders, which has resulted in significant rallies in the past. Analyst Ali discusses this level in a recent post on X.
Long-term holders (LTHs) are investors who have held onto their coins for at least 155 days. These holders, often referred to as diamond hands or HODLers, rarely sell even during market volatility. Single cycle HODLers, within the range of 6 months to 3 years, are a subset of LTHs who bought their coins within a single BTC cycle. This means they have experienced the entire cycle, from the highs of the 2021 bull market to the lows of the 2022 bear market.
The term “cost basis” refers to the average buying price of a group of Bitcoin investors. If the spot price of Bitcoin is below this value, it indicates a net loss for the cohort. Conversely, if the price is above the cost basis, it implies profitability.
A chart depicting the trend in the cost basis of single-cycle LTHs over the past few years is shown. It indicates that the price of Bitcoin has recently interacted with this level. Currently, the cost basis is $34,150, and Bitcoin has already surged above it in the latest rally. This means that single cycle HODLers who were previously in losses since the first half of 2022 are now back in profit.
The chart also highlights the trajectory of Bitcoin during the last three instances when a break above this level occurred. The two major bull rallies in 2016 and 2020 followed such breaks. In addition, the recovery rally in April 2019 also experienced a break of this cost basis, leading to a 99% gain for Bitcoin.
If this pattern holds, Bitcoin could potentially see another rally now that it has broken above the cost basis of single-cycle HODLers. However, the current rally is more similar to the April 2019 recovery rally, suggesting that any surge may be in line with that rally rather than a full-blown bull run.
As of now, Bitcoin has gained only 2% in the past week, with the price hovering above $35,200. The price chart indicates that Bitcoin has been stuck in consolidation recently.
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