Bitcoin STH Average Cost Basis At $90,950 — Why Is It Relevant?

The Bitcoin price continues to fluctuate within the range of $80,000 to $85,000, showing uncertainty in its movement. Since the cryptocurrency lost its grip above $90,000, investors are questioning whether the current correction is an opportunity to “buy the dip” or if the market has peaked.

While there is no definitive answer to these questions, on-chain data can offer valuable insights into what may happen next. The latest on-chain data indicates that a specific level is crucial to monitor before investors re-enter the market.

Level To Watch Before ‘Buying The Dip’

In a recent analysis, crypto analyst Maartunn suggested that it may not be advisable to re-enter the Bitcoin market at the current price. This analysis is based on the movement of the Bitcoin price in relation to the short-term holders’ (STH) average cost basis.

The STH average cost basis metric estimates the average price at which short-term holders (investors who have held Bitcoin for less than 155 days) acquired their coins. This metric serves as a psychological level for BTC investors and can be a significant reference point for price analysis, particularly during bull markets.

During bull markets, Bitcoin typically trades above the short-term holders’ average cost basis, indicating strong buying pressure and positive sentiment from short-term investors. Conversely, when the price falls below this cost basis, as is currently happening, it suggests that short-term investors are at a loss, potentially leading to a sell-off and increased bearish pressure.

According to data from CryptoQuant, the Bitcoin price is currently 6% below the short-term holders’ average cost basis at $90,950. With BTC below the realized price of short-term holders, there is a likelihood of further selling pressure as this investor group seeks to minimize their losses.

Based on this analysis, Maartunn recommended waiting for the Bitcoin price to surpass the STH average cost price before considering re-entry into the market. Interestingly, short-term holders are still accumulating Bitcoin, with over 35,000 BTC purchased in the last 4 days, as reported by crypto analyst Ali Martinez.