Bitcoin continues to experience mixed price action, with the leading cryptocurrency now flashing a signal that has historically appeared near the end of major bear markets.
Onchain indicators spark discussion
On Saturday, July 18, CryptoQuant, a prominent crypto analytics platform known for providing onchain data insights, published new metrics suggesting that Bitcoin’s ongoing downturn could be moving into its final phase.
CryptoQuant analysts presented recent charts tracking the cost basis of wallets classified as short-term and long-term holders. Short-term holders (STH) refer to addresses that have held their Bitcoin for less than six months, while long-term holders (LTH) are those with holding periods exceeding six months.
In an effort to more accurately represent active long-term participants, the analysis excluded coins dormant for over seven years from the LTH cost basis calculation. This adjustment is intended to focus the data on those who may realistically participate in future market activity.
The findings reveal that Bitcoin has maintained a steady downward trajectory over the past nine months. Amid this decline, the STH cost basis has now dropped below the LTH cost basis, a pattern that market analysts often see as an indicator of waning bearish momentum.
Mini dictionary: Cost basis — For Bitcoin holders, the cost basis is the average price at which a coin was acquired. Tracking cost basis across short-term and long-term holders can help analysts assess market sentiment and the stages of price cycles.
Bear market signal debated
Analysts state that this specific cost basis crossover frequently occurs near the conclusion of bear markets. However, they also caution that the present crossover does not confirm that Bitcoin has reached its lowest price or that a new bull market is imminent.
Instead, the onchain metric points to the possibility that the market is entering the final stages of the current bear cycle. The cost basis trend offers insights but doesn’t provide definitive market turning points.
While the short-term holder cost basis crossing below the long-term level has coincided with the end of bear markets in the past, it does not guarantee that Bitcoin has hit its bottom or that an immediate reversal is underway. The metric signals the market may be approaching the last phase of the downturn.
Recent market shifts and outlook
According to CryptoQuant’s data, the short-term holder cost basis has declined from $112,500 to roughly $69,000. This drop suggests that recent buyers have been acquiring Bitcoin at progressively lower prices, even as the downturn continues.
Such consistent buying during falling prices may increase the likelihood of a sentiment reversal, as newer market participants position themselves for a potential recovery.
Nonetheless, market participants remain cautious about declaring any definitive shift, keeping a close watch on broader trading patterns and other related onchain signals to confirm whether the bear cycle’s end is near.
| Metric | Previous Value | Current Value |
|---|---|---|
| Short-term holder cost basis | $112,500 | $69,000 |
| Long-term holder cost basis | Above STH | Below STH |
