Three of the most important cost bases in Bitcoin are now sitting within 2.6% of each other.
The Short-Term Holder Realised Price, the True Market Mean and the 365-day average have been squeezed into a band just $1.9K wide. The last time they were this close together was July 2012.
Bitcoin has only coiled like this four times before. Each time, the move that followed was enormous. And each time, which way it went came down to one thing: which side of the band price was sitting on.
Today, price is barely outside it.
Let's get into it.
Key insights
The Tightest Coil Since 2012: The STH Realised Price, the True Market Mean and the 365-day average are just 2.56% apart, the narrowest gap since July 2012.
Price Is Almost Inside It: Bitcoin closed 3.3% above the top of the band. Counting price as a fourth line, the spread is 5.91%, and only July 2018 was ever tighter.
Volatility Has Gone Quiet: 30-day realised volatility is 24.8%, lower than 97% of readings over the past year.
One Detail Picked the Direction: The four earlier coils were followed by moves as big as +1,117% one way and -63% the other. A single detail decided which, and today it is closer to flipping than in any of them.
Three Cost Bases, One Price
Let's start with what is actually being squeezed together, because each of these three lines measures something different.
The Short-Term Holder Realised Price is the average price newer buyers paid for their coins, covering everything that has changed hands in roughly the last five months. It's where the most recent money in the market breaks even.
The True Market Mean is the average cost basis of the coins that are actually circulating. It strips out the coins that have sat dormant for years or are lost forever, so it tells you what the active market has paid.
The 365-day average is simply the average price over the last year. It's the slowest of the three and has nothing to do with on-chain data at all.
On any normal day these three lines are a long way apart. Newer buyers either paid far more than the rest of the market (after a run higher) or far less (after a crash). So when all three land on the same number, it means something quite rare: recent buyers, active investors and the yearly trend all agree on what Bitcoin is worth.
The green line on the chart above is the width of that band. You can see why I've been watching it so closely. It has collapsed from over 20% a few months ago to 2.56% on 29th October, with the band running from $75.9K (the STH Realised Price) to $77.8K (the True Market Mean), and the 365-day average at $77.3K in between.
Only four earlier dips stand out across the whole history: July 2012 at 2.09%, September 2014 at 3.23%, July 2018 at 3.22% and July 2020 at 6.29%. Today's reading is tighter than three of them.
It also didn't happen slowly. Last Christmas the same band was more than 25% wide, after the run to the all-time high pulled newer buyers' cost basis far above the yearly average. The bear market that followed dragged the short-term holders back down, and this autumn's rally lifted the 365-day average and the True Market Mean back up to meet them.
The obvious question is what happens next. A coil this tight doesn't tell you the direction. What history does tell you is that it rarely stays coiled for long, and that the side of the band price is sitting on has mattered more than anything else.
That's where the four precedents come in, along with two even closer matches for where we are right now.
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