Bitcoin’s price movements are often described as chaotic, but beneath the surface, a rhythmic pattern emerges when analyzing on-chain behavior—especially that of long-term holders (LTHs). These patient investors, who hold BTC through market turbulence, reveal valuable signals about the stage of the current cycle. Two key indicators—Cost Basis and Market Value to Realized Value (MVRV)—are now showing patterns consistent with previous bull market precursors. Understanding these metrics can offer strategic insights into Bitcoin’s long-term trajectory.
The Cyclical Nature of Bitcoin: Driven by Halving Events
At the heart of Bitcoin’s cyclical behavior lies the halving event, which occurs roughly every four years. During each halving, the block reward for miners is cut in half, reducing the supply of new BTC entering the market. This built-in scarcity mechanism has historically triggered a sequence of accumulation, breakout, euphoria, and correction.
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While price charts show volatility, on-chain analytics reveal a more structured narrative. Long-term holders—defined as those who haven’t moved their coins in over 155 days—play a pivotal role in shaping market sentiment and price floors. Their behavior tends to repeat across cycles, making them a reliable barometer for identifying turning points.
LTH Cost Basis: A Foundation for Market Recovery
One of the most telling indicators is the Long-Term Holder Cost Basis—essentially the average price at which long-term investors acquired their Bitcoin. This metric acts as a psychological and economic floor for price corrections.
On-chain analyst @therationalroot recently highlighted a striking development: the LTH cost basis has entered a plateau phase, mirroring patterns seen in prior cycles. After a sharp increase in BTC price, long-term holders tend to hold firm even during downturns, creating a stabilization period that lasts approximately three years.
During this plateau, the BTC price often dips below the cost basis, resulting in unrealized losses. These moments—known as capitulation phases—test investor resolve. However, they also represent prime accumulation windows before the next leg up.
What’s particularly notable today is that the 90-day change in LTH cost basis has begun to stabilize. The downward momentum in this metric is slowing, suggesting that selling pressure from long-term holders is easing. This shift often precedes renewed accumulation and sets the stage for a bullish breakout.
Historically, once the cost basis begins rising again—typically about a year before the halving—it signals strong conviction among holders. The current data suggests we may be entering this phase, with BTC already trading well above the LTH cost basis.
MVRV Ratio: Gauging Market Undervaluation
Another powerful tool for assessing market conditions is the MVRV (Market Value to Realized Value) ratio for long-term holders. MVRV compares Bitcoin’s current market value to its realized value—the average price of all existing coins when they were last moved.
When MVRV drops below 1, it indicates that Bitcoin is trading below its “fair value,” often marking deep bear market lows. These periods—highlighted in green on historical charts—are widely regarded as optimal buying zones.
In the previous two cycles, the LTH MVRV ratio dipped into this oversold zone before major bull runs began. For example:
- In 2015, MVRV crossed above 1 in November and didn’t return to oversold levels until the 2018 crash.
- In 2020, despite the March pandemic crash, MVRV briefly touched the green zone before launching into a historic rally.
Currently, the LTH MVRV stands at 1.28—above 1 and in a safe zone. This means long-term holders are sitting on profits, and the deepest bargain phase may have passed.
However, history shows that retests can occur. Just three months before the 2020 halving, a sudden drop brought MVRV close to 1 again due to external shocks. While such a scenario isn’t guaranteed today, it remains a possibility—especially if macroeconomic pressures persist.
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What These Patterns Suggest for 2025
The convergence of both LTH Cost Basis stabilization and rising MVRV strongly supports the hypothesis that Bitcoin is transitioning into a new phase of its cycle. While short-term volatility may continue, the underlying on-chain fundamentals point toward increasing holder confidence.
Key observations:
- The plateau in cost basis suggests distribution has slowed.
- Rising MVRV indicates growing market value relative to historical acquisition cost.
- Long-term holders are not panicking—they’re holding or selectively accumulating.
These behaviors align with the early stages of a bull market buildup. Although we may not be at peak euphoria yet, the foundation is being laid.
Frequently Asked Questions (FAQ)
Q: What is considered a "long-term holder" in Bitcoin?
A: A long-term holder is typically defined as an entity that has not moved their Bitcoin for more than 155 days. This threshold helps distinguish speculative traders from committed investors.
Q: Why is MVRV below 1 considered a good buying signal?
A: An MVRV below 1 means Bitcoin is trading below the average price at which coins were last acquired—indicating widespread unrealized losses and potential undervaluation. Historically, such levels have preceded strong recoveries.
Q: How does the halving affect long-term holder behavior?
A: The halving reduces new supply, increasing scarcity. This often triggers renewed interest and accumulation from long-term investors who anticipate upward price pressure in the following 12–18 months.
Q: Can on-chain data predict exact price tops or bottoms?
A: No single metric offers perfect timing. However, combining indicators like cost basis and MVRV improves probabilistic forecasting and helps identify high-conviction entry zones.
Q: Is it too late to invest if MVRV is already above 1?
A: Not necessarily. While sub-1 MVRV offers optimal risk-reward, many significant gains occur after this threshold is crossed. The key is understanding broader cycle dynamics rather than chasing perfect timing.
Q: How reliable are these patterns across different market cycles?
A: Despite evolving market conditions, Bitcoin’s core economic model remains unchanged. The repetition of cost basis plateaus and MVRV cycles across multiple halvings demonstrates a strong degree of consistency in investor behavior.
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Conclusion: Signals Point to a Maturing Bull Cycle
The evidence from long-term holder behavior is compelling. Both Cost Basis stabilization and MVRV recovery reflect a market shifting from fear to accumulation—a classic hallmark of post-bottom consolidation.
While no indicator guarantees future performance, the recurrence of these patterns strengthens the case for Bitcoin’s cyclical nature. For informed investors, monitoring these on-chain signals offers a data-driven approach to navigating uncertainty.
As we move closer to the next halving and beyond into 2025, staying attuned to LTH dynamics could prove invaluable. Whether you're accumulating gradually or positioning for breakout momentum, understanding where we stand in the cycle helps align strategy with reality.
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