This highly profitable Bitcoin cross has just formed again

On-chain data shows that a Bitcoin cross that has proven quite profitable has once again formed for the cryptocurrency.

Bitcoin Realized price of short-term owners overtake long-term owners

As one analyst in a CryptoQuant post explained, the realized price for 1 to 3 month holders has just exceeded the price for 6 to 12 month investors.

The “realized price” here refers to a calculation derived from “realized caps”, which is a capitalization model for Bitcoin that assumes that a coin’s true value is the price at which it was last transacted on the blockchain rather than the current BTC price as the normal market value says.

The realized price is obtained when the realized rate is divided by the total number of coins in circulation. Since the realized cap represented the prices at which investors purchased their coins (their “cost basis”), the realized price represents the average acquisition price in the market.

This means that every time the Bitcoin price falls below this metric, the average cryptocurrency investor is holding assets at a loss. Similarly, a breach above means a shift towards profit for the average investor.

In the context of the current discussion, the realized price of three specific segments of the market is relevant; the holders who purchased between 1 month and 3 months ago, 3 months and 6 months ago, and 6 months and 12 months ago.

The first two of these are part of the “short-term holder” (STH) cohort, while the third is part of the “long-term holder” (LTH) group. Here is a chart showing the trend in the realized Bitcoin price specific to these segments of the market:

Looks like two of these metrics have come together in recent days | Source: CryptoQuant

As shown in the graph above, an interesting pattern formed during the run-up to the 2021 bull run. First, the realized price for the 1-month to 3-month cohort exceeded the price for the 6-12 month group. After this crossover, BTC saw a sharp uptrend, but it didn’t last long.

As this price increase slowed, the 3-6 month segment also crossed over this LTH cohort. These transitions suggested that new buying occurred in the market as the rally built. As prices rose during this rally, the STHs had to buy at higher and higher prices, which is why their realized price went up and eventually became higher than the LTHs.

After these crosses were completed, BTC extended the bull run. Recently, the first of these crossovers appears to be forming again, as the realized price of the 1-month 3-month band is now equal to the price of the 6-month to 12-month band.

While it is uncertain whether the second crossover will also take shape now, Bitcoin can observe at least some bullish momentum from this first crossover alone (assuming it is not just a false out), just as it did back in 2020.

BTC price

At the time of writing, Bitcoin is trading around $29,800, up 1% in the past week.

BTC has seen rapid increase in the past day | Source: BTCUSD on TradingView

Featured image from Dylan Leagh at Unsplash.com, Charts from TradingView.com, CryptoQuant.com