• Glassnode data shows that Bitcoin’s latest rejection at the $23,800 level coincided with the cost basis of a particular whale group.
• This group includes investors who bought their coins after December 2018 and have an average acquisition price of $23,800.
• The “realized price” is a capitalization model which takes into account the last moved BTC price instead of its current market value to determine its true worth.
Glassnode Reports on Cost Basis for Bitcoin Whales
Realized Price Metric for Determining Value
Glassnode reported in their weekly report that all three whale groups being considered were underwater for a while after the FTX crash took place last year. The indicator used here is the “realized price,” which is a price derived from the realized cap. This capitalization model assumes that each coin’s actual value is not its current market value, but rather the price at which it was last moved. When this cap is divided by the total number of coins in circulation, it yields the realized price or average acquisition cost of BTC in the market.
Whale Group Acquisition Start Point
The relevant whale group includes all investors holding 1,000 coins or more in their wallets. To gain insight into different eras of acquisitions across this cohort, Glassnode has divided them into three subgroups based on different start points: July 2017 (Binance launch), December 2018 (bear market lows) and March 2020 (COVID bottom). Exchange transactions were used to evaluate what exact prices these whales purchased their coins at as this cohort usually buys from exchanges.
Cost Basis Below Realized Price Signifies Loss
When Bitcoin’s normal price sinks below this realized price, it means holders are likely incurring losses as they paid more for an asset than its current worth on average. As such, understanding this metric can give useful insights into how much impact whales may have when selling off large amounts of coins simultaneously and driving down prices further due to panic selling behavior from other investors watching them do so.
In conclusion, Glassnode’s data provides valuable insights into profitable buying points and potential loss-making scenarios when looking at different cohorts within Bitcoin markets such as whales with large holdings over time frames spanning multiple years since 2017 till now. With access to such powerful metrics like realized prices, traders can make better informed decisions about when to buy or sell BTC accordingly while also gaining insight into potential market movements caused by whales entering or exiting positions en masse.