Long-Term Bitcoin (BTC) Holder Patterns: Breaking Down Cost Basis & MVRV Cycles



The Bitcoin cycles hypothesis is confirmed and recurs in analyzing various on-chain indicators. Its driving force is halving, which takes place every 4 years or so and splits in half the miner’s BTC reward.

In particular, the behavior of long-term holders (LTHs) of Bitcoin gives valuable clues about the stage of the cycle of the largest cryptocurrency. Patient investors who remain unaffected by momentary shifts in the crypto markets are repeating certain cyclical behavior.

Cost Basis and MVRV Cycles

Currently, two on-chain indicators of long-term holders seem to repeat the pattern of previous cycles. Cost Basis and Market Value to Realized Value (MVRV) are building a kind of plateau.

If the history of the pre-halving period repeats itself, this could be a prelude and catalyst for a future bull market in the crypto market.

Plateau in LTH Cost Basis

Well-known on-chain analyst @theratinalroot published a cost basis chart on X for long-term Bitcoin holders. The cost basis is nothing more than the purchase price of an asset. This indicator is crucial for calculating the gains or losses generated by the asset held.

According to the published chart, the cost basis of long-term Bitcoin holders is currently forming a sort of plateau. This was identical in the previous two cycles when a correction followed sharp increases in the cryptocurrency market.

Empower your investments with BTC price predictions.

The plateau can be seen in the chart of the cost basis (dashed line). The value of this indicator for long-term holders remains relatively constant for about 3 years. During each cycle, the BTC price (red chart) periodically drops below the LTH cost basis during this period.

This indicates the capitulation of long-term holders and relatively short-lived periods in which they record unrealized losses.

LTH cost basis / Source: X

After that, the LTH cost basis increases sharply for about 1 year and stabilizes again during the next bear market.

In addition, the analyst draws a chart of the 90-day change of this indicator to illustrate further the accumulation period between a bull market and a bull market (blue arrows). The bounce period seems to have begun, and the BTC price is well above the cost base of long-term holders. In conclusion, @theratinalroot writes:

“The decrease, observed by the 90-day change, is slowing down, indicating a repetition of past cycles.”

MVRV of Long-Term Holders Increases Again

We are currently seeing a similar repeat of the pattern from past cycles on the MVRV metric for long-term holders. Market value to realized value (MVRV) is the ratio of market cap and realized cap. This ratio tells you when the market price is below “fair value”.

The MVRV for LTH has reached the oversold green area in the previous two cycles. Historically, this has proven to be the best time to buy BTC. Also, in the current cycle, the MVRV was (with minor interruptions) below the value of 1 from June 2022 to March 2023.

Even despite the recent declines in the cryptocurrency market, the MVRV of long-term holders is still at a safe level of 1.28. This means the best time to buy BTC has passed, and long-term holders are recording profits.

MVRV for Bitcoin LTH
MVRV for Bitcoin LTH / Source: Glassnode

However, a re-test of the green area in the near future is still not out of the question. Such a situation occurred 3 months before the previous halving when the price of BTC dropped sharply due to the COVID-19 crash (red circle).

In contrast, 4 years earlier, when the MVRV for LTH decisively left the oversold area in November 2015, it did not return there until the end of the 2018 bear market.

Regardless of which scenario plays out this cycle, it appears that the behavior of long-term holders signals the start of a long-term bull market. Both the cost basis and MVRV for LTH make a strong case for the thesis of Bitcoin’s cyclical nature and impending bull market.

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