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.
Let’s learn how tracking where long-term and short-term holders acquired their bitcoins can help 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 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 their Bitcoin for more than 155 days.
- Short-Term Holders (STH): Traders who have held their 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 realized price into LTH and STH groups, you can assess the average cost basis for each group.
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 recent buyers)
If the market price drops below $48,000, many STHs are now at a loss, which can increase selling pressure. But 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 longer than 155 days become increasingly unlikely to be spent, representing “strong hands” or patient investors, while coins held for less time are more likely to be traded or sold, representing “weak hands.”
📖 What is “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.
- 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 Read the Chart
This chart, titled “Bitcoin: Long/Short-Term On-chain Cost Basis”, shows the average on-chain cost basis (i.e., realized prices) for different groups of Bitcoin holders, and how they relate to the spot BTC price over time.
📊 What Each Line Represents:
| Line Color | Metric | Definition |
|---|---|---|
| ⚫ Black | BTC Spot Price | The live market price of bitcoin |
| 🔴 Red | Short-Term Holder (STH) Realized Price | The average price paid by recent buyers (holding <155 days) |
| 🔵 Blue | Long-Term Holder (LTH) Realized Price | The average cost basis of long-term holders (holding >155 days) |
| 🟠 Orange | Aggregate Realized Price | Network-wide average cost basis (all coins, all holders) |
| 🟣 Purple Area | Capitulation Zone | BTC price is below all realized prices (extreme undervaluation) |
📈 Interpreting the Chart
- When BTC Price > STH & LTH Realized Price → Most holders are in profit, often seen in bull markets.
- When BTC Price < STH & LTH Realized Price → Most holders are at a loss, typical of bear market capitulation zones.
- The purple zones (late 2022) show when BTC was trading below all major cost basis levels, historically associated with capitulation and accumulation phases.
In the shown chart (May 2025):
- BTC Price is above all cost bases → Bullish.
- STH cost basis rising sharply → Retail is buying in.
- LTH cost basis is climbing steadily → Institutional or strong-hand accumulation.
- No purple zone = no capitulation risk currently.
- This is a classic bull market structure with healthy on-chain support.
🧠 Why Traders Care
- Helps identify market regime shifts:
- Below realized price → undervaluation and fear.
- Above realized price → overvaluation risk or breakout confirmation.
- Spotting crossovers (e.g., STH price overtaking LTH price) can signal changes in market sentiment or bull/bear transitions.
- When STH cost basis falls below LTH cost basis, it often signals capitulation and market bottoms.
- When STH costs rise faster than LTH costs, it suggests increased demand and potentially late-stage bull market conditions.
Other insights
Market Sentiment:
- Shows where major investor groups are “in profit” or “at a loss.”
- If bitcoin’s market price is above the STH realized price, most recent buyers are in profit, which typically supports bullish sentiment.
- If the price falls below the STH realized price, short-term holders are at a loss, which can trigger selling and signal bearish sentiment.
Support and Resistance:
- The cost basis levels for LTH and STH often act as psychological support or resistance.
- For example, the STH realized price can become a resistance level in bear markets and a support level in bull markets.
- When the market dips to the LTH cost basis, it may find strong support as long-term holders are unlikely to sell below their average purchase price.
Market Cycle Analysis:
- LTHs tend to accumulate during bear markets and distribute during bull markets.
- A rising LTH cost basis can indicate accumulation, while a rising STH cost basis often signals new market entrants buying at higher prices.
Behavioral Analysis:
- STHs are more reactive to price volatility and more likely to sell during downturns.
- LTHs are less sensitive to short-term price action and are considered “smart money” or “patient investors with “diamond hands.”
🟠 Summary Table
By tracking where long- and short-term holders bought their coins, this on-chain metric gives insight into market structure, underlying support, and the psychology of different investor types. It helps you understand not just where the money is, but who is sitting on it and for how long.
| Metric | Line Color | Meaning | 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 | Red | Recent buyers are paying more | Risk-on sentiment |
| LTH Realized Price Flattening | Blue | Dormant coins unmoved | Long-term conviction (HODLers) |