New data reveals that $19,000 in Bitcoin (BTC) may be more important than traders realize.
In the latest edition of its monthly report series, “The Bitcoin Monthly”, investment management firm ARK Invest noted an ongoing battle to defend the Bitcoin investor’s cost basis.
Bitcoin investor cost basis supports the market
Bitcoin price action is currently characterized by choppy movements within a clearly defined range of only around $4,000 across.
Running since June, this streak features what immediately stands out as a focal point: the previous halving cycle record of $20,000.
With BTC/USD frequently crossing this threshold, traders have long sought alternative lines in the sand when it comes to emerging trends for the pair.
For ARK and the report’s guest contributor, Reflection Research co-founder William Clementi, the cost is $19,000, which could be a significant boost.
This is due to the so-called Bitcoin investor cost base – the total price at which the supply of BTC was purchased, minus the portion owned by miners.
“For most of September,” ARK explained, “Bitcoin traded between two key historical levels: the 200-week moving average ($23,500) as resistance and the investor cost base as support ($19,000).
BTC is now at $19,000, a level that, if breached, would result in massive losses across the entire Bitcoin investor base.
“As strong holder behavior combats a weak macro environment, the decision on both sides will play an important role in Bitcoin’s performance in the short to medium term,” the report added.
Bitcoin 200 Week Moving Average vs Fundamental Investor Cost Chart (Screenshot). Source: ARK Invest
As Cointelegraph reported this week, analysts are eagerly anticipating that the total share of supply is currently being held at a loss.
In previous bear markets, this always exceeded 60% before the price reached its lowest levels, which leads them to conclude that in 2022 the market is still lower.
Investor groups mirror 2018’s behavior
Several numbers covering losses for long-term holders (LTHs) paint a similar picture from mid-September – BTC price action could target $14,000 before repeating previous bear market lows.
RELATED: Bitcoin Target Remains at $14,000, Trader Warns DXY Due to ‘Parabola’ Break
Continuing, ARK noted that the cost basis for holders of LTHs and short-term holders (STHs) crossed for the first time since 2018 – the year it saw a macroeconomic bottom of $3,100 at the end of the fourth quarter.
STH is defined as an entity that holds BTC for up to 155 days, with LTH constituting investments for longer periods.
“The short-term holder cost basis (STH) has crossed below the long-term holder cost basis (LTH), a signal typically associated with high conviction market bottoms,” the report commented.
“Potentially a sign of low speculative overshoots, this transition indicates that owners of short-term stocks have either given up or are too old to become long-term owners.”