Before we dive into the current market conditions, it’s important to understand the concept of "historical average cost basis." In simple terms, this is not just an average of historical prices. Instead, it’s calculated using on-chain data to determine the price at which each BTC last moved on the blockchain. This allows us to estimate the average acquisition cost of all circulating Bitcoin in the market.
One widely referenced optimized metric among analysts is the 10y_RP. This indicator excludes most long-lost Bitcoin (such as coins mined by Satoshi in the early days), so it’s considered a more accurate reflection of the average cost for active market participants. As highlighted in previous Gate analyst articles, this cost line serves as a psychological and technical "Maginot Line" for the bulls. If breached, it means the vast majority of market participants—from long-term holders to short-term speculators—could find themselves underwater, which can easily trigger a cascade of panic selling.
The Brutal Battle Between Current Price and Cost Basis
According to Gate market data, as of February 24, 2026, the BTC price has fallen below 63,000 USDT after several consecutive days of decline, with the latest quote at approximately $62,997.6.
Taking a broader view, since BTC hit its all-time high of over $126,000 in 2025, the market has entered a prolonged correction, with the drawdown now exceeding 50%. At this moment, the price is hovering right around the so-called "historical average cost basis."
According to available information, analyst Murphy points out that the $65,000 zone—where this cost line sits—is the bulls’ last line of defense. The harsh reality, however, is that Gate’s real-time quote on February 24 clearly broke through this key psychological level. This isn’t just a simple price breach; it represents a collapse in market confidence.
Why Could a "Breakdown" Trigger a "Deep Bear" Market?
If BTC’s price confirms a decisive break below this cost basis, the market logic could shift from "correction" to "deep bear." There are three main transmission mechanisms behind this shift:
Micro Level: Bullish Liquidations and Forced Sell-Offs
On Gate’s market feed, we observed that a sharp drop within just 15 minutes (from 04:00 to 04:15 UTC on February 24) triggered a wave of leveraged liquidations. Automated trading systems accelerated the sell-off, amplifying the decline. Once the price falls below everyone’s cost basis, support levels become resistance, and any rebound is likely seen as an exit opportunity—fueling a "drop – weak rebound – further drop" death spiral.Macro Level: Institutional Conviction Shaken
What sets this bull run apart is the massive buying from Bitcoin spot ETFs and institutions like MicroStrategy. In-depth analysis from Gate users notes that Bitcoin has already fallen below MicroStrategy’s average cost basis. If the market continues to drop below the historical average cost for all participants, even professional institutional positions will be in the red. This could turn ETF flows from net inflows to persistent net outflows, further draining market liquidity.Sentiment Level: Extreme Fear Spreads
Currently, the Fear & Greed Index has dropped to 5, signaling extreme fear. In this environment, investors stop caring about "halving" or "future narratives" and focus solely on minimizing immediate losses. Once the cost basis is breached, this fear can quickly morph into indiscriminate selling.
Market Signals: Dual Confirmation from On-Chain and Capital Flows
We need to look beyond just price. It’s essential to monitor capital flows on platforms like Gate and on-chain data:
- Open Interest Plummets: Total open interest in Bitcoin futures across the market has hit its lowest point since August 2025, down about 53% from its peak. This indicates leveraged capital is rapidly exiting, speculative fervor has cooled to a minimum, and there’s little fuel left for a rebound.
- Stablecoin Reserves Dry Up: Exchange stablecoin reserves have plunged 14% over the past three months, signaling a severe shortage of buying power and not enough "ammo" to absorb selling pressure.
- Persistent Macro Headwinds: The Federal Reserve’s hawkish stance, uncertainty around Trump administration tariff policies, and geopolitical risks (such as US-Iran tensions) are all pushing capital out of BTC and other risk assets and into traditional safe havens like gold.
Conclusion
For users trading on Gate, we must face the outcome of this critical battle head-on. While historical data shows that breaking below the cost basis often leads to a prolonged bear market bottoming process (potentially lasting 6–12 months), we also need to objectively consider structural changes in the market.
Some argue that as institutional participation deepens, Bitcoin’s volatility is structurally declining, and classic on-chain indicators (like MVRV and the S2F model) are losing their predictive power. So, while the "historical average cost basis" remains a key psychological threshold, its "power" in the ETF-driven era still needs to be tested by the market.
Trading suggestions:
- Short-term traders: Watch funding rates and large order flows on Gate. Unless the price reclaims $66,000 (the resistance level in today’s Gate analysis), focus on shorting rallies or staying on the sidelines, and always set strict stop-losses.
- Medium- to long-term investors: Consider advice from Gate Plaza users. If BTC falls to the $60,000–$62,000 range, you might consider building positions in a "pyramid" strategy, but keep your initial allocation to no more than 20% of your total capital.
The battle for this key cost basis has been decided, and the market appears to be heading toward a "deep bear" phase. But as history shows, every deep bear market is a process of industry cleansing—and the moment when the seeds for the next bull run are sown.
