Analyst: Bitcoin is currently at its closest buying range in nearly three years

Jinse Finance reported that, according to CryptoQuant data, Bitcoin’s realized price (the average cost basis, weighted by the last transaction of all coins on the network) is $54,286, while the spot price stands at $68,774, a difference of about $14,500, or approximately 21% above the realized price.

Looking back at the bear market in 2022, a signal for the actual bottom was when the spot price fell below the realized price. From June to October 2022, Bitcoin’s spot price was below the overall cost basis, and when the spot price was about 15% lower than the realized price, this decline almost exactly corresponded to the cycle low of around $15,500.

Similar breakdowns occurred during the COVID crash in early 2020. These periods were true accumulation zones, as the entire network was, on average, in a state of loss. Historically, buying when the market as a whole is at a loss has been one of the most reliable entry signals for Bitcoin.

At present, this is not the case. The spot price is 21% higher than the realized price, which means the average holder is still profitable—providing a significant buffer. If Bitcoin were to drop from its current level to the realized price, it would have to fall to about $54,000, representing another 20% decrease.

It is worth noting that the gap between spot price and realized price is narrowing very rapidly. By the end of 2024, when Bitcoin traded above $119,000, the premium was around 120%, and within about 15 months, this has compressed to 21%. This is one of the fastest periods in history where the price line approached the realized price, aside from complete market crashes.

CryptoQuant analyst Oinonen pointed out on Monday that Bitcoin has entered the so-called “accumulation zone” and compared it to the 2022 bottom. However, this judgment is premature.

CryptoQuant’s own charts show that the definition of the accumulation zone in 2022 was when the spot price traded at or below the realized price. The box drawn on the current price action indicates that spot price remains far above the indicator that defines this zone.