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Bitcoin Faces Risk Of Further Decline If It Drops Below Short-Term Holder Cost Basis: Report

Ash Tiwari
by Ash Tiwari
3 months ago
·
Posted in Bitcoin News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

According to Glassnode’s latest The Week On-Chain report, Bitcoin (BTC) must remain above the Short-Term Holder (STH) cost basis to avoid potential downside risks. Historically, this price level has served as a crucial pivot point between local bull and bear market phases, making it a key area to watch.

Bitcoin Must Avoid Sliding Below STH Cost Basis

Since the beginning of February, BTC has been trading within a narrow range between $93,000 and $98,000. The leading cryptocurrency by market cap has managed to withstand the impact of several major macroeconomic events, including US President Donald Trump’s proposed trade tariffs.

Related Reading: Bitcoin To Hit $1.5 Million By 2030? ARK Invest’s Cathie Wood Says Odds Are Rising

However, BTC’s resilience does not guarantee immunity from shifting market sentiment. Glassnode’s report emphasizes that for Bitcoin to sustain its bullish momentum, it must remain above the STH cost basis, which currently sits at approximately $92,500.

Per the report, BTC is currently trading $1,000 to $5,000 above the STH cost basis. Past data indicates that the STH cost basis level has usually acted as a pivot point where the average recent buyer moves between a state of unrealized profit or loss. 

If BTC falls below $92,500, it would imply that the average short-term holder is at an unrealized loss, potentially triggering panic selling. On the other hand, trading above this level means that most short-term holders are in profit, which could reinforce bullish momentum.

Glassnode’s report includes a chart illustrating this trend. As seen below, whenever BTC reached a new all-time high (ATH), followed by a correction, it tended to touch the lower band of the STH cost basis model.

STH
Source: Glassnode

The chart further shows that historical BTC downtrends have typically extended to about -1 standard deviation below the STH cost basis. Applying this model to the current market cycle, BTC could decline to as low as $71,600, where the model’s lower band is positioned.

Crypto Market Close To ‘Decisive Moment’

The report notes that the crypto market is currently witnessing an accumulation phase which mirrors that of May 2021. Although new investors aggressively accumulated BTC in April 2024, the magnitude of the STH supply uptrend in the current cycle structurally aligns more with May 2021 rather than 2024.

Related Reading: Bitcoin Trading More Like A Speculative Asset Than A Store Of Value, Report Says

As a result, the market is approaching a decisive moment, characterized by sharp price action in either direction. The report explains:

If demand remains strong, Bitcoin could establish a new range above ATHs. However, a lack of sustained buy pressure could lead to a deeper distribution-driven correction, similar to prior post-ATH phases. This would likely be driven by panic amongst recent buyers who see their recently acquired coins move from being in profit to holding an unrealized loss.

While downside risks remain, BTC bulls can rejoice as the US dollar’s expected decline is likely to benefit the flagship cryptocurrency. Similarly, sentiment around BTC is starting to reignite following the slump in memecoin frenzy. At press time, BTC trades at $97,100, up 1.2% in the past 24 hours.

bitcoin
BTC trades at $97,100 on the daily chart | Source: BTCUSDT on TradingView.com
Featured Image from Unsplash.com, Charts from Glassnode and TradingView.com
Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ash Tiwari

Ash Tiwari

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Ash is a seasoned freelance editor and writer with extensive experience in the blockchain and cryptocurrency industry. Over the course of his career, he has contributed to major publications, playing a key role in shaping informative, timely content related to decentralized finance (DeFi), cryptocurrency trends, and blockchain innovation. His ability to break down complex topics has allowed both seasoned professionals and newcomers to the industry to benefit from his work. Beyond these specific roles, Ash's writing expertise spans a wide array of content, including news updates, long-form analysis, and thought leadership pieces. He has helped multiple platforms maintain high editorial standards, ensuring that articles not only inform but also engage readers through clarity and in-depth research. His work reflects a deep understanding of the rapidly evolving blockchain ecosystem, making him a valuable contributor in a field where staying current is essential. In addition to his writing work, Ash has developed a strong skill set in managing content teams. He has led diverse groups of writers and researchers, overseeing the editorial process from topic selection, approval, editing, to final publication. His leadership ensured that content production was timely, accurate, and aligned with the strategic goals of the platforms he worked with. This has not only strengthened his expertise in content strategy but also honed his project management and team coordination skills. Ash's ability to combine technical expertise with editorial oversight is further bolstered by his knowledge of blockchain analysis tools such as Etherscan, Dune Analytics, and Santiment. These tools have provided him with the data necessary to create well-researched, insightful articles that offer deeper market perspectives. Whether it’s tracking the movement of digital assets or analyzing blockchain transactions, his analytical approach adds value to the content he produces, ensuring readers receive accurate and actionable information. In the realm of content creation, Ash is not limited to just cryptocurrency markets. He has demonstrated versatility in covering other emerging technologies, market trends, and digital transformation across various industries. His in-depth research, coupled with a sharp editorial eye, has made him a sought-after professional in the freelance writing community. From developing editorial calendars to managing content delivery schedules, he has honed a meticulous approach to project management that ensures timely, high-quality work delivery. Throughout his freelance career, Ash has consistently focused on improving audience engagement through well-researched, insightful, and relevant content. His ability to adapt to the evolving needs of clients, whether it's enhancing the visibility of digital platforms or producing thought-provoking pieces for a wide range of audiences, sets him apart as a dynamic force in the field of digital content creation. His contributions have helped to shape a well-rounded portfolio that showcases his versatility, technical expertise, and dedication to elevating the standards of journalism in blockchain and related sectors.

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