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Token Balance Distribution by Average Cost

Overview

Token Balance Distribution by Average Cost categorizes wallets based on their average acquisition cost and displays the total token quantity held within each cost tier. This visualization reveals how token supply is distributed across different entry price levels, showing where the majority of tokens are concentrated.

Definition

This indicator divides wallet addresses into a specified number of tiers based on their average acquisition cost, then sums the total token balance (not USD value) held within each tier as of a user-specified date. The results are displayed as a bar chart showing how token quantity is distributed across the cost basis spectrum.

Significance

  • Token Supply Concentration: Reveals which cost basis levels control the most tokens
  • Supply Distribution Mapping: Shows how actual tokens are spread across entry prices
  • Voting Power Analysis: For governance tokens, indicates where voting control is concentrated
  • Token Allocation Insights: Provides visibility into how the supply is positioned by cost basis

Calculation Method

The indicator processes: 1. All addresses holding the token as of the specified date 2. Divides these addresses into the number of tiers specified by the "Number of Tiers" parameter based on their average acquisition cost 3. Sums the raw token quantity (not USD value) held by addresses in each cost tier 4. Displays results as a horizontal bar chart with acquisition cost tiers on the y-axis and token quantity on the x-axis

Interpretation

  • Tall Bars: Indicate significant token quantity concentrated at specific cost levels
  • Supply Clustering: High token quantities in certain ranges shows where most supply is held
  • Distribution Pattern: Shows whether tokens are evenly spread or concentrated at specific cost levels
  • Token-Weighted Support: Tiers with high token quantities often become stronger psychological support levels

Analysis Applications

  • Supply-Weighted Position Analysis: Identify cost levels where significant token supply exists
  • Token Control Assessment: Visualize how supply ownership is spread across different price points
  • Supply Distribution Study: Map where most tokens have accumulated over time
  • Token Liquidity Risk: Evaluate potential selling pressure if specific cost tiers move into profit

Considerations

  • Differs from USD value distribution by focusing on actual token quantity
  • Large token quantities may represent long-term holders or project reserves
  • Supply concentration doesn't necessarily indicate higher USD value (depends on acquisition cost)
  • Date selection impacts the cost basis calculation at that point in time

Parameters

  • Date: User-defined parameter specifying the historical point for cost basis calculation
  • Number of Tiers: Determines exactly how many divisions the cost basis spectrum will be split into (e.g., 33 creates 33 distinct cost-based tiers)