What to know:
- The realized price of all bitcoin investors since the cryptocurrency’s inception is over $41,000 and was $65,900 in 2024.
- Last year’s buyers, on average, had an unrealized profit of around 40%.
- The average cost basis as we enter 2025 is around $95,500, indicating a slight profit for the buyers in the past few days.
As a seasoned crypto investor with a decade of experience under my belt, I can confidently say that the recent surge in Bitcoin’s price has been nothing short of breathtaking. Last year, I watched in awe as the average buyer saw an unrealized profit of around 40%. However, it is essential to understand that this isn’t the complete picture.
The realized price, which measures the average value at which bitcoins last moved on-chain, provides a more accurate reflection of individual investors’ overall profit or loss. Last year’s buyers, for instance, saw an average realized price of around $65,900 by December 31, 2024. This means that Bitcoin would have to slump some 31% for last year’s investors to return to break-even levels.
Monitoring the realized price is crucial because it offers a great support level during bear markets and rarely trades below it. In fact, I vividly remember how closely watching the cost basis of the 2024 cohort would have been a profitable trading strategy last year.
Now, as we enter 2025, the average cost basis is around $95,500, putting me at a slight profit as we start the year. With Bitcoin currently trading above this mark, I’m cautiously optimistic about the potential for further growth in the coming months.
And to lighten the mood, let me leave you with this: They say that investing in crypto is like watching paint dry – slow and tedious, but the end result is worth it. But at least when you invest in Bitcoin, it doesn’t need a coat of paint every few years!
In simpler terms, although the value of Bitcoin (BTC) nearly doubled in the previous year, those who purchased it in 2024, on average, experienced only a small portion of this increase when considering the realized price, which is a specific measurement used to calculate the actual cost at which each coin was bought.
The “realized price” refers to the typical value of all bitcoins based on the price they last transacted on the blockchain. This figure has been approximately $41,000 for BTC since its launch in 2009. However, for coins purchased during the previous year, their realized price was around $65,901 by December 31st. Given that the current market price is roughly $93,000, this implies that, on average, those who bought bitcoins in 2024 were potentially facing an unrealized profit of about 40%.
Keeping track of the actual selling price is crucial in determining an individual’s total profit, loss, or breakeven point. In simpler terms, if bitcoin were to drop by approximately 31%, it would bring last year’s investors back to their initial investment price, which is often referred to as the break-even point. As the U.S. spot-listed exchange-traded funds (ETFs) started trading on January 11th, this date being close to the start of the year makes it a fair assumption for calculating their cost basis.
Keeping an eye on the current level holds significance. Historically, when Bitcoin’s price dips below its 2024 realized price, it often signals a temporary low in the Bitcoin market. This happened once after ETFs were launched and multiple times during the middle of the year. Tracking the cost basis for the 2024 group could have been a lucrative trading tactic.
As we step into 2025, the average cost basis is approximately $95,500, implying a slight profit for buyers at the beginning of the year. At this moment, Bitcoin is being traded above $96,000.
Furthermore, historically, the actual selling price has often served as a robust floor or base level for Bitcoin during market downturns, seldom dipping below it.
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2025-01-03 15:23