Bitcoin bear market not yet over according to on-chain data

The Bitcoin price is currently at $63.7K, but on-chain data suggests that the current bear market could last for several more months. Analyst Darkfost points to a historical pattern where the cost basis of short-term holders eventually always drops below that of long-term holders, and that moment is approaching again.

Bitcoin is available at OKX and Bybit.

STH versus LTH: what the numbers say

At the moment, the realised price of long-term holders (LTH) is around $49.513. while short-term holders (STH) paid an average of approximately $72.547 for their Bitcoin. The difference between these two levels is a widely used indicator of market health. As long as the STH cost basis remains above that of LTH, short-term holders are deeper in the red than the more experienced long-term investors.

Darkfost states that the cyclical nature of Bitcoin has remained intact so far. In every previous bear market, the STH cost basis eventually dropped below that of LTH, indicating capitulation among newer holders. That point has not been reached yet, but the gap is narrowing. Galaxy Research already estimated the possible bottom earlier this year at $40.000 to $46.000, which would be in line with a further decline towards the LTH cost basis.

Historical pattern points to more pain

Every bear market in Bitcoin history has put pressure on long-term holders at some point. That is a remarkably consistent fact, regardless of the specific circumstances of that period. If the current cycle follows this pattern, a crossing of the STH below the LTH cost basis means that several more months of uncertainty lie ahead.

The current Bitcoin price of $63.729 is still well above the LTH realised price of $49.513. but June threatens to be the worst month since 2022. Also, a breakout above $65.000 has yet to materialise, which keeps the pressure on short-term holders for now. Whether history will repeat itself remains to be seen, but the data at least gives a clear signal that caution is warranted.