Bitcoin’s rejection coincided with these whales’ cost basis
Data from Glassnode shows that Bitcoin’s recent rejection around the $23,800 level coincided with the cost base of a particular group of whales.
Whales purchased after December 2018 have a cost basis of $23,800
According to the latest weekly report from Glassnode, all three groups of whales assessed here went under water for a while after the FTX crash took place last year.
The relevant indicator here is the “realized price”, which is a price derived from the realized tariff. This capitalization model for Bitcoin assumes that the actual 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 ceiling is divided by the total number of coins in circulation, the realized price is obtained. The significance of this calculation is that it represents the average acquisition price in the BTC market.
This means that when the normal price of Bitcoin drops below this realized price, the average holder enters a state of loss. This realized price is the average cost base for the entire market, but the indicator can also be defined 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. As this group is large and diverse, Glassnode has divided it into three subgroups in order to study the most favorable realized prices across different time periods.
The research firm has divided these groups using different starting points for acquisitions for each. For the first group, the cutoff is July 2017, which was the launch of the cryptocurrency exchange Binance.
For the second, it is December 2018 (the bottom of the bear market in the previous cycle), and for the last one, it is the COVID bottom in March 2020. To find out exactly what prices these whales bought their coins, Glassnode has only considered exchange transactions here (then this group usually uses these platforms for buying and selling).
Here’s a chart showing how the cost bases of these Bitcoin whale subgroups 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 graph above, the whales from the 2017+ era have their realized price around $18,000 right now, which suggests that the average whale who acquired their coins between now and 2017 is in a profitable state right now.
However, the 2018+ and 2020+ whales appear to be at a loss at the moment as their realized prices are $23,800 and $28,700 respectively. Interestingly, the resistance that Bitcoin has faced recently is roughly at the same level as the cost basis of the previous group of whales.
This is clearly visible in the chart, where the recent rally can be seen to have stalled as the cryptocurrency’s price has met this level. In the past, cost fundamentals like these have usually provided resistance to the price due to the fact that investors, who had previously been at a loss, see such levels as ideal selling windows.
BTC price
At the time of writing, Bitcoin is trading around $22,400, down 4% in the last week.
Looks like BTC is still moving flat | Source: BTCUSD on TradingView
Featured image from Maxim Hopman at Unsplash.com, Charts from TradingView.com, Glassnode.com
