Author: Murphy Source: X, @Murphychen888
In the past few cycles, one of the best perspectives to observe BTC coming out of the bottom structure is through the changes in the relationship between cost basis and price action.
The logic is that when the price enters the cost range of a certain BTC holder group, the price trend represents the behavior of this group. Is it "respect to run first" or "continue to hold"?
If it is the former, the price will encounter resistance near the cost line; if it is the latter, the price will be able to smoothly break through the cost resistance. If the price shuttles up and down around the cost line, it means that the market is repeatedly entangled and gamed.
Figure 1: Average cost line of holding BTC for 1-3 months
Based on the experience of long-term data research, I believe that among many groups, the short-term holder cost basis (1-3m_RP) held for 1-3 months is the most effective reference basis (yellow line in Figure 1).
As you can see from the chart, in all past bear market cycles, 1-3m_RP has been the key resistance level for rebounds in downtrends. This is because holding chips for 1-3 months is not very firm. A large number of them enter the market without intending to hold on to it for the long term.
Maybe I just wanted to "eat a fast food", but I didn't expect to get trapped when I entered, and I was forced to hold it for 1-3 months as a last resort. When the price rebound gives them the opportunity to unwind, they will sell out without hesitation.
So, we see that in 2015, 2018 and 22, every time BTC rebounds to the yellow line and encounters resistance, it will continue to correct; it rebounds again, encounters resistance again, and then corrects again...
Of course, there are many false breakthroughs among them, which means that when some chips start to make profits, they "run first to respect", and then drive more chips to "imitate", forming a false breakthrough.
In the final analysis, it is a manifestation of investors' lack of confidence in the market.
Figure 2: Supply of BTC held for 1-3 months
For example, we look at the changes in BTC supply held for 1-3 months in Figure 2. After March 29, there is a clear downward trend. It means that this part of the chips has become less.
There are two possibilities for becoming less:
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1. Because of continued holding, it has been divided into longer-term holding groups.
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2. Because it was sold, it was divided into a shorter holding group.
Figure 3: Supply of BTC held for 3-6 months
Looking at Figure 3 again, the supply of BTC held for 3-6 months did not increase significantly after March 29. That proves case 2, that is, 1-3 months of BTC were sold during the rebound, and there are currently 1.09 million BTC left.
Now that the logic is over, let’s return to the present:
As of April 15, 1-3m_RP was roughly around $75,400, and the price of BTC was also around this. This is the second time in this downtrend that BTC has rebounded close to this resistance level.
The last time was from January 13th to January 19th; a small breakthrough triggered selling pressure and continued to pull back. So will it still be the case this time?
Judging from past data, I think the possibility is very high; after all, in the past three cycles, there has never been a successful reversal in the second challenge.
Of course, from a rational perspective we cannot make "path defaults". Objectively speaking, another situation is also possible:
That is, BTC can break through the yellow line, but then it will encounter a greater resistance level above, that is, STH-RP (short-term holder average cost line), which is currently around $81,000, with 2.31 million BTC (much larger than 1-3m chips).
If it encounters resistance here, then BTC may shuttle up and down around the yellow line, that is, the market needs time to digest the selling pressure and start to choose a direction carefully.
As time goes by, the yellow line will slowly begin to turn, which is similar to the position marked by the green dotted line in Figure 1. That means that the market has stepped out of the bottom structure and entered the "bear-bull transition period."
Probably speaking, Scenario 1 (the yellow line is blocked for the second time) will be greater, but Scenario 2 (traveling up and down the yellow line) is not completely impossible. Therefore, we need to be patient and observe, and even if there is a temporary breakthrough, we must judge whether it is true or false.
In any case, the current direction of the yellow line is still downward, and it is impossible to suddenly turn upward. This requires a relatively long transformation process, and this process is the best time left for us to make decisions.
