Bitcoin (BTC) is poised to more than double in value by 2024, but investors who acquired BTC last year have seen an average of 40% unrealized gains based on the “realized price” metric.
The realized price is determined by averaging the value of all Bitcoin at the most recent price it was transacted on the blockchain. The historical realized price of BTC since its establishment in 2009 was approximately $41,000, whereas for coins purchased in 2024, that number escalated to $65,901 by the end of the year. With Bitcoin’s market price closing in at about $93,000 on December 31, buyers from the previous year were holding a substantial amount of unrealized profit on average.
The realized price acts as a standard for comprehending the cost basis and overall profit or loss of individual Bitcoin investors. Bitcoin would need to decrease by approximately 31% to reach the average breakeven price for 2024 buyers. This metric has gained significance following the introduction of spot-listed Bitcoin exchange-traded funds (ETFs) in the United States on January 11, 2024, and is closely linked to the initial cost basis for many investors at the beginning of the year.
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Historically, Bitcoin’s price dropping below the realized price often signals local market bottoms. This trend was noticed multiple times in January 2024, shortly after the ETF debut, and again in the middle of the year, solidifying the realized price as a crucial indicator for investors.
As the year 2025 commences, the average cost basis for Bitcoin buyers has climbed to around $95,500.
*This is not investment advice.