Bitcoin bull market confirmed by cost basis signal

A popular on-chain model signals that the Bitcoin bull market has been officially confirmed. Analyst Darkfost shares via CryptoQuant that Bitcoin’s short-term cost basis has again crossed above the active long-term cost basis, a pattern that historically coincides with the start of a new upward cycle. It is the fifth time this signal has occurred. At the time of writing, Bitcoin stands at $84.100, a decline of 2.8% in the past 24 hours.

Bitcoin is available at OKX and Bybit.

In brief:

• The STH cost basis crosses above the active LTH cost basis, which is historically a bull market signal
• It is the fifth time this pattern has occurred since Bitcoin’s inception
• More than 3.5 million BTC older than ten years remains unmoved

What the signal entails

The signal that Darkfost describes arises when the cost basis of short-term holders, that is, the average purchase price of recently active buyers, rises above the cost basis of long-term holders. In doing so, the analyst does not use the total LTH cost basis, but exclusively the portion of the supply that has been moved at least once in the past seven years.

That choice excludes dormant or fully inactive Bitcoin, which according to Darkfost makes the cost basis of long-term holders more realistic. The analyst himself indicates that it is an arbitrary delineation and not a perfect method.

Fifth signal in Bitcoin’s history

The fact that this pattern is now occurring for the fifth time gives the signal somewhat more historical weight, according to Darkfost. Earlier, on 11 July, the analyst already pointed to an approaching reversal based on an end-of-bear-market signal. The current confirmation would be the follow-up to that.

The analyst also points to the role of inflows via Bitcoin ETFs as a contributing cause of the shifting momentum. If the signal is nevertheless invalidated, Darkfost says he will report this.

Dormant Bitcoin continues to grow

A striking detail in the analysis is the size of the inactive Bitcoin supply. More than 3.5 million BTC, older than ten years, remains unmoved. This portion of the supply grows monthly by an average of 8,000 to 30,000 BTC.

Since 2019, that average was negative only once, after an old miner moved around 100,000 BTC. That remained an isolated event. There has long been discussion in the market about the movements of large Bitcoin holders, but so far the structurally dormant supply appears to be changing little.