Understanding Bitcoin Cost for Long-Term Holders

According to BlockBeats, the concept of Long Term Holder (LTH) in Bitcoin investment is defined by Glassnode as holding BTC for more than 155 days. This article explores the profitability and cost metrics associated with LTHs, specifically focusing on LTH-MVRV and LTH-RP. LTH-RP, or Realized Price for Long Term Holders, represents the average cost of BTC for these investors. It is calculated by dividing the LTH-Realized Cap by the circulating supply. Typically, the LTH-RP is lower than the market's average Realized Price, indicating that long-term holders generally acquire BTC at a lower cost. LTH-MVRV is a metric that reflects the profitability of long-term holders. It is calculated similarly to MVRV, using the formula "current market value / LTH-Realized Cap" or "current market price / LTH-Realized Price." The fluctuations in LTH-MVRV are often more pronounced than those in MVRV, as long-term holders tend to achieve higher profits. An interesting application of LTH-MVRV is in identifying potential buying opportunities. When LTH-MVRV is less than 1, it indicates that even long-term holders are experiencing losses, suggesting a possible market bottom and a good time to buy. This article is part of a series aimed at educating readers on on-chain data analysis. For those interested in further exploring this topic, following the series is recommended.