Bitcoin trades steadily above the short-term holder cost basis, reflecting resilience and positioning the market in a healthier phase than prior cycle tops.
Standard deviation bands around the short-term holder cost basis act as dynamic levels, guiding traders on potential overheating and recovery signals.
On-chain metrics and trading volume confirm capitulation phases near lower deviation bands, often followed by institutional accumulation and renewed market confidence.
Bitcoin’s short-term holder (STH) cost basis remains a crucial metric for assessing market health, with current price action staying above this level. Analysts view this as a sign of resilience, showing that momentum remains intact without overheating.
The Role of Short-Term Holder Cost Basis
The short-term holder cost basis represents the average purchase price of investors who acquired Bitcoin within the last 155 days. This group is highly reactive to price changes and often drives volatility during both rallies and corrections.
According to analysis shared by ZYN, Bitcoin has managed to remain above this metric, suggesting that market conditions remain stable. Unlike previous cycle tops, current deviations are modest, pointing to a healthier growth phase.
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The indicator has historically provided insight into turning points. When Bitcoin trades above the cost basis, strength typically builds, while dips below often trigger exits by weaker participants.
Standard Deviation Bands as Support and Resistance
The cost basis is tracked with standard deviation bands, which function as dynamic support and resistance levels during market cycles. Approaching the upper band signals overheating, while movement toward the lower band reflects fear-driven conditions.
During the 2021 rally, a push beyond the upper deviation band preceded a notable correction, showing its effectiveness as a market signal. Currently, the STH cost basis is estimated in the mid-$50,000 range, providing a reference level for traders.
A sustained position above this average reinforces confidence that the market retains momentum without showing signs of unsustainable euphoria. This gives traders a benchmark to monitor as Bitcoin’s structure develops.
On-Chain and Volume Correlations
On-chain data from providers such as Glassnode indicate that when the cost basis nears the lower deviation band, realized losses often peak. This usually corresponds with weak holders leaving the market, followed by renewed accumulation phases.
Trading volumes add confirmation during these periods. Elevated exchange activity, particularly in BTC/USD pairs, suggests capitulation events, which ultimately allow a period of stability and price recovery.
Analysts explain that a breach below the lower band implies stronger bearish market pressures, as compared to a rebound toward the mean which is supportive of ongoing institutional buying opportunity./ For now, the indicator suggests the market remains in a balanced phase.
