An on-chain signal suggesting the bitcoin market may have entered the final stretch of a bear market has been detected. An analysis said the average purchase price of short-term holders and long-term holders crossed downward, showing a pattern similar to the later phase of past bear markets.

On July 20, blockchain media outlet CoinPost reported that on-chain analyst Darkpost said a signal pointing to the final phase of a bear market formed as bitcoin short-term holders' (STH) cost basis fell below long-term holders' (LTH) cost basis.

Darkpost said on X, formerly Twitter, on July 18 that the downward crossover was confirmed after a three-day verification period. He stressed that the signal does not mean the bottom in bitcoin's price has been confirmed at the current point.

STH refers to investors who have held bitcoin for less than 6 months, while LTH refers to investors who have held it for more than 6 months. The analysis excluded bitcoin among long-term holdings that has not moved for more than 7 years from the LTH cost-basis calculation. It did so to compare the two groups' average purchase prices, focusing on holdings more likely to be traded in the market.

Darkpost analysed that short-term holders kept lowering their average purchase price as they bought at lower prices during the continuing downtrend. As a result, the STH cost basis fell to $69,000 from $112,500, eventually dropping below the LTH cost basis.

He said such a downward crossover was a signal seen in the later stage of past bear markets. He added that to judge the market has actually turned into a bull market, an upward crossover must be confirmed, with the STH cost basis moving back above the LTH cost basis.

He said an upward crossover is a signal confirming entry into a bull market and can be used as a 기준 for ending staggered purchases under dollar-cost averaging (DCA). That means the current zone may be one to consider staggered buying, but it does not guarantee the timing of a trend reversal itself.

Darkpost assessed that even in the current market, where institutional investor participation has expanded, investors' behaviour patterns have not changed much from past cycles. The analysis said this price movement is also following a path similar to cost-basis changes seen in previous bear markets.

The analysis, however, is based on an on-chain indicator constructed by Darkpost himself. It is difficult to be definitive about bitcoin's bottom or the timing of a trend reversal based only on a crossover in cost basis.

In the market ahead, key points to watch are whether the STH and LTH cost bases cross upward again and whether the short-term holders' average purchase price, which has fallen to $69,000, acts as a price support level.