Bitcoin Foundation for Mid-Term Breakout Remains Weak, According to Cost Basis Data

On-chain analytics company Glassnode has pointed out that Bitcoin has witnessed only a limited accumulation band during its recent period of consolidation.

Key Takeaways

Bitcoin's Cost Basis Distribution (CBD) reveals limited accumulation among short-term holders.
Significant accumulation occurred at lower price levels in November, providing temporary support.
A new accumulation cluster is emerging in the $62k–$72k range, although its strength is modest.
Overall, the potential for a mid-term breakout is currently weak, according to analytics from Glassnode.

Bitcoin

Understanding Bitcoin's Short-Term Holder Cost Basis Distribution

In a recent update on X, Glassnode discussed the current trends in the Bitcoin Cost Basis Distribution (CBD) among short-term holders. The CBD serves as an important gauge, reflecting the amount of Bitcoin purchased at various price levels throughout its history.

Specifically, the CBD for short-term holders (STHs) monitors the supply acquired in the last 155 days. This short duration leads to the thinning of supply clusters over time, either as coins change hands at different price levels (which alters their cost basis) or as they transition into the long-term holder (LTH) category after surpassing the 155-day threshold.

Here's a chart provided by Glassnode, illustrating the changes in Bitcoin's STH CBD over the past year:

Bitcoin STH CBD

As shown in the graph, Bitcoin's STH CBD saw a significant increase in supply at the lower price points observed in November, demonstrating that considerable new accumulation occurred in response to the market downturn. This dense supply area functioned as a support level for Bitcoin, aiding its stability during the consolidation phase. However, bearish momentum eventually returned, resulting in a drop in Bitcoin's price below this supply cluster, indicating that those connected to it are now at a loss.

In addition to the robust supply zone at the lower end of the range, the consolidation phase from November to January also recorded some supply accumulation at higher price levels. Although not as substantial as at the lows, this activity indicated that coins were actively being exchanged.

Currently, Bitcoin has entered another period of sideways movement, but the data shows a lack of strong buying response, as well as no formation of significant supply clusters during this consolidation. Nonetheless, some buying has occurred, with particular supply starting to establish a cost basis within this range. Glassnode notes, “An accumulation cluster is forming in the $62k–$72k range.” However, its intensity is relatively weak compared to previous phases that led to lasting price expansion.

It remains to be seen how this supply range will evolve in the near future. According to Glassnode, the foundation for a mid-term breakout currently appears weak.

Current BTC Price

As of the time of writing, Bitcoin is trading around $71,100, reflecting a nearly 5% increase over the past week.

Bitcoin Price Chart
The price trend of Bitcoin over the last five days | Source: BTCUSDT on TradingView