The closing days of 2022 provide another record low for on-chain indicators, especially Bitcoin.
Today’s on-chain research goes more toward the latter scenario since two key Bitcoin market indices have yet to indicate a resurgence. Despite the fact that the cost basis and actual market capitalization are quite low now, there are no indications of a positive turnaround.
Similar to conventional markets, Bitcoin investors utilize the cost basis to assess the profitability of their investment. They determine profits or losses on capital by comparing the selling price to the acquisition price.
The well-known analyst @DylanLeClair_ recently provided a chart of such an indicator, known as the on-chain cost basis, on Twitter. He notes that this statistic has just dropped below the psychological threshold of $20,000.
It’s important to remember that the cost base for Bitcoin wasn’t exactly inexpensive even as recently as the first few days of June 2022. In an investigation conducted at the time, BeInCrypto observed that the cost basis of long-term holders was still much higher than their purchase price. At the moment, short-term investors were already in the red.
In contrast, the great majority of cryptocurrency market players are in the red in the present market environment, with BTC reaching a lower low of $15,476 on November 21.
The current extraordinarily low levels of on-chain cost basis are due to the reduction in realized market capitalization. As a result of employing this measure, various components of the supply chain are assigned varying dollar values (instead of using the current daily close). The cost basis is computed precisely by valuing each UTXO based on its most recent sale price.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.