ARK Invest's Cost Basis: The Tug-of-War in the Bitcoin Bear Market
Investor cost basis is an important focus for ARK Invest. The company is part of an ongoing "tug-of-war" in the 2022 Bitcoin bear market.
Bitcoin (BTC) holding $19,000 could be more important than traders realize, new data reveals.
In the latest edition of its monthly report series, "The Bitcoin Monthly," investment management firm ARK Invest has flagged an ongoing battle for the defense of Bitcoin's investor cost basis. This battle is being fought between two groups of Bitcoin investors: those who believe that the cryptocurrency should be primarily used as a digital asset, and those who believe that it should be primarily used as a digital currency.
Bitcoin investor cost basis buoys market
Bitcoin's price action is currently characterized by volatile moves within a clearly defined range only around $4,000 across. While this may not seem like much, it actually represents a significant development for the cryptocurrency, which has seen its value fluctuate wildly in recent months.
Looking at the current state of the market, it is clear that the $20,000 mark is a key point of focus for many investors. This is because it represents the all-time high from the last halving cycle. As such, it is seen as a key indicator of where the market is heading in the future.
As BTC/USD continues to cross new thresholds, traders are seeking alternative ways to identify new trends for the pair. By using different lines in the sand, traders can more easily identify when a new trend is developing. This can help them to take advantage of market movements and make profits.
The report's guest contributor, William Clemente, sees the value of ARK at $19,000 as important support. This could function well as part of a balanced investment portfolio.
As the price of Bitcoin continues to rise, so does the aggregate cost basis of the BTC supply. This is due to Bitcoin's so-called investor cost basis, which is the total price at which the BTC supply was bought, minus the portion owned by miners. With the investor cost basis increasing, it is likely that we will see even more investment in Bitcoin in the future.
ARK's explanation of bitcoin's movements in September show that the digital currency is still being influenced by historical levels. The 200-week moving average ($23,500) is acting as a resistance level, while the investor cost basis ($19,000) is providing support. This suggests that bitcoin is still in a transitional period, as it tries to find new levels of support and resistance.
Now that Bitcoin has dropped below $19,000, many investors are concerned that further losses could spark a sell-off throughout the entire market. While some believe that Bitcoin will eventually rebound, others are not so sure.
It is clear that the current macro environment is weak and that bitcoin's performance will be significantly affected by how this situation plays out. holders are clearly divided on what the best course of action is, and it remains to be seen which side will prevail.
As Cointelegraph reported this week, analysts are keenly eyeing the overall proportion of the supply currently being held at a loss. A sustained increase in this figure could indicate that more and more investors are bullish on the long-term prospects of the cryptocurrency market, and confident that prices will eventually rebound.
It's difficult to say definitively what will happen in the stock market in the next few years, but some analysts are predicting that it will continue to fall. In prior bear markets, the percentage of stocks that were considered "undervalued" always crossed 60% before a price bottom hit.
Investor behavior in 2018 was echoed by cohorts in 2019.
It seems that BTC price action could target $14,000 before echoing prior bear market bottoms, according to figures covering the losses of long-term holders (LTHs). This paints a similar picture as of mid-September, suggesting that the market could be entering a period of renewed bullishness.
Bitcoin still has $14K target, warns trader as DXY due ‘parabola’ break The trader who warned of Bitcoin's impending drop to $6,000 earlier this year is now saying that the leading cryptocurrency still has more room to fall before it
According to ARK, the cost basis of LTHs and short-term holders (STHs) has crossed over for the first time since 2018. This is an important development, as it suggests that long-term holders are now in a better position to profit from future price increases than short-term holders.
It is clear that STHs and LTHs are differentiating themselves in the market by the duration of their investment period. STHs are looking to hold BTC for shorter periods of time, while LTHs are making longer-term investments.
This is good news for long-term investors, as it suggests that the market may be bottoming out. However, short-term holders may want to reconsider their positions, as their cost basis is now below that of long-term holders.
“Likely a sign of low speculative excesses, this cross suggests that short-term holders have capitulated or are aging into longterm holders.”
