Last updated on January 21
This metric divides the realized price (or cost basis) of short-term holders by the realized price of long-term holders (LTH) to formulate what's known as the cost-basis ratio. By doing so, we can analyze the state of the KAS market. To understand how the metric works and why we use it, let's define a few terms first.
Realized Price: The Kaspa Realized Price is the value of all KAS coins at the price they were last transacted on-chain, divided by the number of circulated KAS coins. The Realized Price differs from the Market Price, which indicates the current price of KAS. The Realized Price, on the other hand, tells us the average purchase price of all KAS coins in circulation.
Moreover, it's essential to note that the Realized Price values each UTXO at the value it held when it last moved from one wallet to another, rather than its current value.
Long-term Holders (LTH): represent the total supply of KAS held by long-term holders, defined by any entity holding KAS for more than 155 days.
Short-term Holders (STH): represent the total supply of KAS held by short-term holders, defined by any entity holding KAS for less than 155 days or more.
By combining these definitions, we can see that LTH Realized Price is the average price of the Long-Term Holder KAS supply and the STH Realized Price is the average price of the Short-Term holder KAS supply with both valued at the day each coin last transacted on-chain.
Why is it Important?
When the STH:LTH cost-basis ratio increases, the realized price of all STHs increases relative to all LTHs; conversely, when the STH:LTH cost-basis ratio decreases, the realized price of all LTHs increases relative to the realized price of all STHs.
Why does this matter? Historically, during a bear market, the LTH cost basis ratio rises, while the STH cost basis trend remains low. This is because short-term holders tend to have less conviction and are eager to sell at the sign of incoming cycle tops. During a bear market, on the other hand, conviction remains king. Thus, during a bull market, the STH cost basis ratio rises while LTH remains somewhat stagnant. There are not enough coins to go around to meet newfound demand, so "number go to moon."
How to Read the Chat:
The Chart consists of the following components:
The Kaspa Market Price (The White Line) is recorded in USD and plotted against the price on the y-axis and time on the x-axis from just before January 2023 to the present time.
The Long-term Holder (LTH) Realized Price (The Orange Line) represents the average price of the Long-Term Holder KAS supply.
The Short-term Holder (STH) Realized Price (The Green Line) represents the average price of the Short-Term Holder KAS supply.
The STH-LTH Cost Basis Ratio (The Blue Line) represents the cost basis ratio of 2 and 3.
Look for when the blue line spikes or rises to spot bull market trends and when the blue line falls to spot bear market trends. Similarly, when the orange line rises, this can indicate an incoming or already established market high.
Want to Learn More?
See our charts on Kaspa’s Realized Price, specifically the STH Realized Price chart and the LTH Realized Price chart.