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Average Cost Excluding Top N Holders

Overview

Average Cost Excluding Top N Holders calculates the weighted average acquisition price for all token holders except the largest N addresses. This metric provides insights into the cost basis of the broader market while eliminating the potential distortion caused by whale wallets, offering a more representative view of typical investor behavior.

Definition

This indicator is calculated by determining the weighted average acquisition price of all tokens currently in circulation, excluding those held by the top N addresses ranked by token balance, based on the market price at the time each token was transferred to its current holder.

Significance

  • Retail Sentiment: Reflects the cost basis of smaller holders more accurately
  • Market Breadth Indicator: Provides insights into the broader market excluding outliers
  • True Support Assessment: Identifies more realistic psychological support levels
  • Concentration Impact: Reveals how large holders might be skewing the overall average cost

Calculation Method

The indicator follows these steps: 1. Rank all addresses by token balance 2. Exclude the top N addresses from this ranking 3. Calculate the weighted average acquisition price for tokens held by all remaining addresses 4. Weight based on token quantity held by each included address

Interpretation

  • Comparison with Total Average Cost: Differences highlight the impact of top holders
  • Divergence Analysis: Growing gap between this metric and Total Average Cost may indicate increasing whale influence
  • Support Level Identification: More accurately represents price levels where broader market buying may occur
  • Market Democratization: Helps assess if a token is becoming more or less dominated by large holders

Analysis Applications

  • Retail Behavior Analysis: Focus specifically on non-whale market participants
  • True Market Sentiment: Filter out potentially market-manipulative large holders
  • Democratic Price Discovery: Understand price levels significant to the majority of holders
  • Selling Pressure Prediction: Better forecast potential selling behavior from the broader market

Considerations

  • Definition of "top N" requires thoughtful selection (typically top 50, 100, or 200 addresses)
  • Some seemingly large holders may be exchange wallets representing many smaller users
  • Very new tokens may have less meaningful results due to limited holder history
  • Should be analyzed alongside other holder metrics for comprehensive insights

Parameters

  • N (Number of Top Holders to Exclude): Configurable parameter defining how many top addresses to exclude from the calculation
  • Standard base parameters for time range and resolution settings