Unit 1 · Level 2 · Whale watching
On-chain cost basis
Because every transfer is timestamped, you can look up the market price at the moment any coin last moved (a rough 'purchase price' for that coin). Average this across all coins and you get realized price: what the market as a whole roughly paid. When the market trades below realized price, the average holder is underwater. That's information no stock market gives you for free.
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What you get asked
What is an asset's 'realized price'?
Each coin is valued at the price when it last changed hands, then averaged. It's a rough proxy for the market's collective cost basis.
A whale wallet bought 200 ETH at €1,500 and later 200 ETH at €2,500. What is the wallet's average cost per ETH?
(200 × 1,500 + 200 × 2,500) ÷ 400 = €2,000. Equal-sized buys just average the two prices. This is the same maths behind realized price, wallet by wallet.
The market price falls below realized price. What does that tell you?
It's an average, so some holders are still in profit. Historically Bitcoin has spent only brief, painful stretches below realized price, which is why analysts watch the line. No guarantee lives there, though.
Match each cost-basis situation to what holders are feeling
Cost basis turns price charts into psychology charts: it tells you roughly how much profit or pain sits behind every wallet.
Why does knowing a whale's approximate cost basis matter for reading their moves?
A whale sitting on 3x gains behaves differently from one underwater. Cost basis doesn't predict their move. It tells you which moves would make sense. 🐜
The rest of this unit
Big wallets leave big footprints. Learn to read them without being fooled.