Why is the historical average turnover cost of BTC considered the "dividing line" between bullish and bearish markets?

Before discussing the current market situation, we need to understand what “historical average turnover cost” means. Simply put, it is not just an average of past prices, but an on-chain data analysis that records the price at which each BTC last moved on the blockchain, thereby calculating the average acquisition cost of all circulating bitcoins in the market.

Currently, a widely referenced optimization indicator among analysts is 10y_RP. This metric excludes most long-lost bitcoins (such as early mined blocks by Satoshi), making it closer to the true, active trader’s average cost line. In previous analyst articles from Gate, it was pointed out that this cost line forms a “Maginot Line” for bulls on both psychological and technical levels. If broken, it indicates that the majority of market participants (from long-term holders to short-term speculators) may be in unrealized losses, which can easily trigger chain reactions of panic selling.

The brutal game between current price and cost line

According to Gate’s market data, as of February 24, 2026, after several days of decline, BTC price has fallen below 63,000 USDT, currently quoted at about $62,997.6.

Looking at the longer term, since Bitcoin hit a peak of over $126,000 in 2025, the market entered a prolonged correction phase, with a retracement of over 50%. At this moment, the price is tightly hugging the so-called “historical average turnover cost” line.

Research shows that analyst Murphy pointed out that the $65,000 range where this cost line resides is the last barrier for bulls. However, the harsh reality is that the Gate real-time quote on February 24 has already clearly broken below this key psychological level. This is not just a simple price breakdown but a collapse of market confidence.

Why might “breaking below” trigger a “deep bear”?

If BTC price confirms a valid break below this cost line, market logic will shift from “correction” to “deep bear,” mainly due to three transmission mechanisms:

1. Micro-level: Long liquidation and stop-loss cascades
2. In Gate’s market report, we see that a rapid decline within just 15 minutes (from 04:00 to 04:15 UTC on February 24) led to concentrated liquidation of leveraged positions, with automated trading systems rapidly selling off, further amplifying the decline. When the price falls below everyone’s cost line, support levels turn into resistance, and any rebound may be seen as an exit opportunity, creating a death spiral of “decline - weak rebound - further decline.”
3. Macro-level: Erosion of institutional confidence
4. This bull market differs from previous ones mainly due to massive institutional buying, such as Bitcoin spot ETFs and MicroStrategy. A deep analysis published by Gate users notes that Bitcoin has already fallen below MicroStrategy’s average cost line. If it continues to break below the market’s historical average cost, even professional institutional holdings will be in loss territory. This could cause ETF funds to shift from net inflows to persistent net outflows, further draining market liquidity.
5. Sentiment level: Spread of extreme fear
6. Currently, the Fear & Greed Index, which measures market sentiment, has dropped to 5, indicating extreme fear. Under this emotion, investors no longer focus on “halving” or “future narratives,” but solely on how to minimize current losses. Once the cost line is broken, this fear can quickly turn into indiscriminate selling.

Market signals: On-chain and capital-side double confirmation

We need to look beyond price and also observe capital flows reflected on platforms like Gate and on-chain data:

• Open interest plummets: The total open futures contracts for Bitcoin across the network hit a new low since August 2025, down about 53% from the peak. This indicates leveraged funds are rapidly exiting, market speculation is at a low point, and there is little fuel for rebounds.
• Stablecoin reserves dry up: Stablecoin reserves on exchanges have decreased by 14% over three months, indicating severe market purchasing power shortage, with insufficient “ammunition” to absorb selling pressure.
• Persistent macro pressure: Hawkish stance of the Federal Reserve, uncertainty over tariffs under the Trump administration, geopolitical risks (such as US-Iran tensions) all lead to capital withdrawal from risk assets like BTC, shifting into traditional safe havens like gold.

Conclusion

For users trading on Gate, we must face the outcome of this critical game. Although historical data shows that breaking below the cost line often means a prolonged bear market (possibly lasting 6-12 months), we should also objectively consider the structural changes in the market.

Some believe that with increasing institutionalization, Bitcoin’s volatility is structurally decreasing, and classic on-chain indicators (like MVRV, S2F models) are losing effectiveness. Therefore, while the “historical average turnover cost” remains an important psychological threshold, its “power” in an ETF-dominated era may be diminished, and this remains to be validated by the market.

Operational suggestions:

• Short-term traders: Focus on funding rates and large order book levels on Gate. Before the price stabilizes above $66,000 (the resistance level identified in Gate’s analysis today), consider shorting on rallies or staying on the sidelines, with strict stop-loss settings.
• Medium- to long-term investors: You may consider the advice from Gate’s community, and if BTC drops to the $60,000–62,000 range, adopt a pyramiding approach to build positions gradually. However, initial position size should be controlled within 20% of total capital.

The battle at the key cost line has already determined the outcome, and the market seems to be heading into a “deep bear” phase. But as history shows, every deep bear is a process of industry pruning and a seedbed for the next bull run.