CryptoQuant analyst Darkfrost highlights a key shift in Bitcoin’s price dynamics as the short-term holder (STH) cost basis recently crossed below the long-term holder (LTH) cost basis. This crossover, pending a three-day confirmation window, signals that Bitcoin may be entering the final stages of its nine-month bear market phase. The distinction between holders is key: short-term holders keep BTC for under six months, while long-term holders retain coins longer than six months, excluding dormant supplies inactive for over seven years. This method isolates economically active coins, providing a more accurate picture of market sentiment.

The drop in the STH cost basis from $112,500 to approximately $69,000 reflects newer investors purchasing Bitcoin at lower prices, reducing their average entry point. Although this crossover does not confirm that the market bottom has been reached, it sets the stage for a potential trend reversal, which would be validated only if the cost basis crosses upward again, signaling a bull market onset.

Whale Accumulation and ETF Flows Bolster Price Recovery

Supporting this cautious optimism, whale wallets have amassed over 270,000 BTC within two weeks, representing $16.7 billion at current prices. This accumulation occurred despite the United States spot Bitcoin ETFs experiencing their worst monthly outflows since inception, with June redemptions totaling approximately $4.06 billion. However, July saw a rebound with net ETF inflows of $264.4 million, driven notably by Fidelity’s FBTC and ARK 21Shares Bitcoin ETFs. The return of institutional demand contributed to Bitcoin’s price recovery after it dipped below $58,000 in early July.

Macroeconomic factors also played a role. Softer inflation data from the US, showing a 0.4% monthly decline in consumer prices and a reduction in annual inflation to 3.5%, eased fears of further Federal Reserve rate hikes. This environment encouraged risk assets, including Bitcoin, to regain footing.

US Spot Demand Remains a Key Constraint

Despite positive developments, the Bitcoin price faces headwinds from a record-negative Coinbase premium, indicating weak spot market demand within the United States. This persistent discount on Coinbase relative to other exchanges suggests cautious retail or institutional US buyers, which may continue to cap Bitcoin’s upside until demand stabilizes.

Investors should watch how these conflicting signals evolve. While whale activity and ETF inflows hint at renewed confidence, the subdued spot demand and need for cost basis confirmation imply that volatility and uncertainty remain elevated.

This material is informational and does not constitute financial advice.