Imagine a bustling city with two distinct groups: one filled with long-time residents who have lived there for decades, and another buzzing with newcomers who have just moved in.
The long-timers have weathered every storm, know the true value of their homes, and are less likely to sell at the first sign of trouble.
The newcomers, on the other hand, are more sensitive to changes in the real estate market. If prices dip, they might quickly pack up and leave.
In the world of Bitcoin, these two groups are known as Long-Term Holders (LTH) and Short-Term Holders (STH), and understanding the average price each group paid for their coins can reveal a lot about the sentiment of the entire market.
Tracking where long-term and short-term holders acquired their bitcoins helps gauge market sentiment, identify support/resistance levels, and anticipate shifts in market cycles.
What Is the Long/Short-Term On-chain Cost Basis?
The Long/Short-Term On-chain Cost Basis is an on-chain metric that measures the average acquisition price (cost basis) of coins held by two distinct groups:
- Long-Term Holders (LTH): Investors who have held Bitcoin for more than 155 days.
- Short-Term Holders (STH): Traders who have held Bitcoin for 155 days or less.
This metric is derived from the realized price, which is the average price at which all bitcoins in a cohort were last moved on-chain.
By splitting the realized price into LTH and STH groups, you can assess the average cost basis for each investor segment.
Example:
Suppose Bitcoin’s current price is $50,000:
- LTH realized price: $30,000 (average cost basis for long-term holders)
- STH realized price: $48,000 (average cost basis for short-term holders)
If the market price drops below $48,000**, many STHs are at a loss, increasing selling pressure. Conversely, if the price stays above **$48,000, STHs remain in profit, supporting bullish momentum.
Why 155 Days?
The 155-day threshold is based on statistical analysis of Bitcoin holding patterns:
- Coins held for longer than 155 days are unlikely to be spent, representing "strong hands" (patient investors).
- Coins held for less than 155 days are more likely to be traded, representing "weak hands."
Understanding "Realized Price"
Realized Price is the average price at which coins were last moved, weighted by coin age. It reflects the average cost basis for a group of holders.
Key components include:
- STH Realized Price (Red): Cost basis of coins held <155 days
- LTH Realized Price (Blue): Cost basis of coins held >155 days
- BTC Realized Price (Orange): Network-wide average cost basis
How to Interpret the Chart
The Bitcoin: Long/Short-Term On-chain Cost Basis chart reveals the average on-chain cost basis for different Bitcoin holder groups and their relationship with the BTC spot price.
What Each Line Represents
| Line Color | Metric | Definition |
|---|---|---|
| ⚫ Black | BTC Spot Price | Live market price of Bitcoin |
| 🔴 Red | STH Realized Price | Average price paid by recent buyers (<155 days) |
| 🔵 Blue | LTH Realized Price | Average cost basis of long-term holders (>155 days) |
| 🟠 Orange | Aggregate Realized Price | Network-wide average cost basis |
| 🟣 Purple Area | Capitulation Zone | BTC price below all realized prices (extreme undervaluation) |
Key Insights
- BTC Price > STH & LTH Realized Price: Most holders are in profit (bullish).
- BTC Price < STH & LTH Realized Price: Most holders are at a loss (bearish).
- Purple Zones: Indicate capitulation (late 2022) and accumulation phases.
Current Market Example (May 2025):
- BTC Price Above All Cost Bases: Bullish momentum.
- STH Cost Basis Rising Sharply: Retail investors entering.
- LTH Cost Basis Climbing Steadily: Institutional accumulation.
- No Capitulation Zone: Low risk of a market bottom.
Why This Metric Matters
Market Sentiment
- Shows where major investor groups are in profit or at a loss.
- If BTC price is above STH realized price, recent buyers are profitable (bullish).
- If BTC price is below STH realized price, short-term holders panic-sell (bearish).
Support & Resistance
- STH realized price acts as psychological support/resistance.
- LTH cost basis often serves as strong support (long-term holders rarely sell below their average cost).
Market Cycles
- LTHs accumulate in bear markets and distribute in bull markets.
- STH cost basis rising fast signals FOMO-driven buying.
Behavioral Analysis
- STHs react to volatility, often selling during downturns.
- LTHs hold through volatility, reflecting "diamond hands."
Summary Table
| Metric | Meaning | Market Signal |
|---|---|---|
| BTC Price < All Realized Prices | Capitulation zone (purple area) | Potential bottom / accumulation |
| BTC Price > All Realized Prices | Profit zone for most holders | Bullish continuation |
| STH Realized Price Rising Fast | Recent buyers paying higher prices | Risk-on sentiment |
| LTH Realized Price Flattening | Dormant coins unmoved | Long-term conviction |
FAQ
Why do traders monitor STH/LTH cost basis?
👉 Understanding cost basis helps predict market sentiment shifts and identify potential support/resistance levels.
How does the 155-day threshold impact market analysis?
The 155-day mark separates patient investors (LTHs) from reactive traders (STHs), helping distinguish long-term trends from short-term fluctuations.
What does a rising STH cost basis indicate?
A sharp increase suggests retail investors entering at higher prices, often seen in late-stage bull markets.
How can LTH cost basis signal accumulation?
A steadily rising LTH cost basis implies institutional or strong-hand investors buying, reinforcing long-term bullish trends.
By tracking Long/Short-Term On-chain Cost Basis, traders gain valuable insights into Bitcoin’s market structure, investor psychology, and potential trend reversals. Whether you're a hodler or an active trader, understanding these dynamics helps navigate crypto market cycles with confidence.