Glassnode: Bitcoin Short Term Future Depends on Maintaining the STH Cost Basis
Blockchain analytics firm Glassnode has highlighted the importance of Bitcoin maintaining its Short-Term Holder (STH) cost basis in order to withstand market pressure. Currently set at $62.5K, the STH cost basis serves as a gauge for the short-term health of the market. If Bitcoin fails to hold above this level, recent buyers may face intense pressure. Despite a recent correction, Bitcoin has rebounded and is trading slightly below the STH cost basis at $62,443. Glassnode notes that although the 26% drawdown from this year’s highs is significant, it is less severe compared to past market cycles. The report also mentions that recent months have been challenging due to economic uncertainties and geopolitical tensions, resulting in a 12% decline in Bitcoin since April.
Short-Term Holders (STHs) play a crucial role in determining near-term market action. Currently, these investors are in a profitable position, with their supply in profit outweighing their supply in loss by a ratio of 1.2. The STH-MVRV ratio has also bounced back, indicating improved profitability for new investors in the Bitcoin market. However, as gains accumulate, there is an increasing incentive for STHs to lock in profits, which may result in selling pressure if Bitcoin struggles to maintain its current levels.
Glassnode emphasizes that besides the STH cost basis, two other figures are important for assessing Bitcoin’s market health. The True Market Mean, standing at $47K, and the Active Investor Price, currently at $52.5K, provide additional support levels. Throughout 2024, Bitcoin has generally remained above these levels, except for a brief dip below the Active Investor Price in August. This indicates that the market is still healthy and capable of weathering retracements.
The report also mentions a decrease in speculative activity in the derivatives market, with the weekly cost of leverage for long positions dropping from $120M during the all-time high in March to $15.3M. This suggests a decline in speculative trading and a potential shift towards more stable market conditions.