Bitcoin’s Rejection Coincided With These Whales’ Cost Basis
Data from Glassnode shows that Bitcoin’s latest rejection around the $23,800 level coincided with the cost base of a certain group of whales.
Whales purchased after December 2018 have a base cost of $23,800
According to Glassnode’s latest weekly report, all three pods of whales considered here were underwater for a while after the FTX accident occurred last year.
The relevant indicator here is the “realized price”, which is a price derived from the realized limit. This capitalization model for Bitcoin assumes that the real value of each coin in the circulating supply is not the current BTC price (as the market cap says), but the price at which it was last moved.
When this limit is divided by the total number of coins in circulation, the realized price is obtained. The significance of this metric is that it represents the average acquisition price in the BTC market.
This means that when the regular Bitcoin price falls below this realized price, the average holder enters a losing state. This realized price is the average cost basis for the entire market, but the indicator can also be set for specific parts of the market.
An important cohort for any cryptocurrency is the “whale” group, which in the case of BTC includes all investors who have at least 1,000 coins in their wallets. Since this group is large and diverse, Glassnode divided it into three subgroups to study the most favorable realized prices at different times.
The analytics company divided these groups using different acquisition thresholds for each. For the first group, the cutoff is July 2017, which was the launch of cryptocurrency exchange Binance.
For the second, it’s December 2018 (the previous cycle’s bear market lows), and for the latter, it’s the March 2020 COVID bottom. Also, to find out at what exact prices these whales are buying their coins , Glassnode only considered exchange transactions here (as this group often uses these platforms to buy and sell).
Here is a chart that shows how the cost bases of these subgroups of Bitcoin whales have changed over the years:
The realized prices of the different whale subgroups in the market | Source: Glassnode's The Week Onchain - Week 10, 2023
As shown in the chart above, the 2017+ era whales are priced at around $18,000 now, suggesting that the average whale who acquired his coins between now and 2017 is in a state of profit now.
The 2018+ and 2020+ whales, however, appear to be at a loss currently as their realized prices are $23,800 and $28,700 respectively. Interestingly, the resistance Bitcoin has been facing recently is roughly on par with the old whale group cost base.
This is clearly visible on the chart, where the last rally can be seen stalled when the cryptocurrency price reached this level. In the past, cost base levels like these have often offered price resistance due to the fact that investors, who were previously on the losing side, see these levels as ideal selling windows.
At the time of writing, Bitcoin is trading around $22,400, down 4% over the past week.
Looks like BTC is still moving flat | Source: BTCUSD on TradingView
Featured image of Maxim Hopman on Unsplash.com, charts from TradingView.com, Glassnode.com