Alex Thorn leads the research team at Galaxy Digital, and he has spent a significant amount of time observing, analysing, and thinking about how Bitcoin and crypto markets evolve over time.
Looking forward to this interview with Alex, absolute legend.
I do have a question though. I read this in a glassnode article today:
"When the market enters a prolonged regime of contraction, diminishing returns motivate investors to cash out at lower prices, cutting their losses. Thus, the cost basis of relatively young supply tails the spot price lower. The repricing of short-term holder supply to lower prices values can be characterized as a net capital outflow from the Bitcoin ecosystem."
I always thought of cost basis as "the cold storage price", meaning when did people buy their coins. How does this square with the statement made above that "The repricing of short-term holder supply to lower prices values can be characterized as a net capital outflow."
I feel like when the cost basis is at 58k and price is at 63k, these holders are in profit. This focuses on buying. Selling is the opposite side of the coin but I cannot put one and one here together.
I guess my question is also about whethere there is a STH spending cost basis and a STH holding cost basis and if so, how these to can be distinguished.
This is due to STH coins which were bought high, being capitulated out and revalued lower.
If someone buys an asset for $60k and sells if to $58k, they have destroyed $2k in value. The buyer needed less capital to buy the same asset, thus a net outflow.
If STH for 1w-1m is lower (at 58k) than STH for 1m-3m, this means that a bunch of STH coins were sold at 58k and new buyers came in to scoop up these coins. This signals a capital outflow at 60k or so, while new capital was coming in at 58k (new buyers that have stepped in).
Hey Check
Looking forward to this interview with Alex, absolute legend.
I do have a question though. I read this in a glassnode article today:
"When the market enters a prolonged regime of contraction, diminishing returns motivate investors to cash out at lower prices, cutting their losses. Thus, the cost basis of relatively young supply tails the spot price lower. The repricing of short-term holder supply to lower prices values can be characterized as a net capital outflow from the Bitcoin ecosystem."
I always thought of cost basis as "the cold storage price", meaning when did people buy their coins. How does this square with the statement made above that "The repricing of short-term holder supply to lower prices values can be characterized as a net capital outflow."
I feel like when the cost basis is at 58k and price is at 63k, these holders are in profit. This focuses on buying. Selling is the opposite side of the coin but I cannot put one and one here together.
Thanks
I guess my question is also about whethere there is a STH spending cost basis and a STH holding cost basis and if so, how these to can be distinguished.
There is yes.
MVRV = Unrealised profit loss (derive cost basis of coins still held)
SOPR = Spent profit loss (derive cost basis where coins 'came from' on avg)
This is due to STH coins which were bought high, being capitulated out and revalued lower.
If someone buys an asset for $60k and sells if to $58k, they have destroyed $2k in value. The buyer needed less capital to buy the same asset, thus a net outflow.
Ah okay, I think I get it now.
If STH for 1w-1m is lower (at 58k) than STH for 1m-3m, this means that a bunch of STH coins were sold at 58k and new buyers came in to scoop up these coins. This signals a capital outflow at 60k or so, while new capital was coming in at 58k (new buyers that have stepped in).
Do I have this right?
Yes that is correct.