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Top Holder Average Cost

Overview

Top Holder Average Cost calculates the weighted average acquisition price specifically for the largest token holders (by balance) at any given time. This metric provides insights into whale behavior, institutional investment thresholds, and potential price impact from major holders.

Definition

Top Holder Average Cost is calculated by determining the weighted average acquisition price of tokens held by the top N addresses ranked by token balance on each day, based on the market price at the time each token was transferred to these holders.

Significance

  • Whale Sentiment: Reveals the cost basis of the most influential market participants
  • Smart Money Indicator: Often reflects sophisticated investor entry points
  • Accumulation Detection: Helps identify quiet accumulation phases by major players
  • Potential Resistance/Support: Indicates price levels where large holders may act

Calculation Method

The indicator tracks: 1. The top N addresses by token balance on each day (dynamic list that changes daily) 2. The acquisition price of tokens held by these addresses 3. The weighted average of these prices based on token quantity

Key characteristics: - The composition of top holders changes over time as balances fluctuate - Historical calculations reflect the top holders as of that specific day - Each day's value represents only the wallets that were top holders on that particular day

Interpretation

  • Below Market Price: Suggests top holders acquired positions at lower prices (potential profit taking ahead)
  • Above Market Price: Indicates top holders bought at higher levels (potential support from averaged-down buying)
  • Convergence with Market Price: May signal accumulation or distribution by major holders
  • Divergence from Total Average Cost: Highlights difference between whale and retail cost basis

Analysis Applications

  • Whale Tracking: Monitor large holder behavior without identifying specific addresses
  • Market Structure Analysis: Understand price levels significant to major players
  • Institutional Threshold Detection: Identify price ranges attracting substantial investment
  • Distribution Phase Identification: Spot potential selling pressure from large holders in profit

Considerations

  • Exchange wallets may represent many users but appear as single large holders
  • Some large holders may be protocol-owned treasuries with different motivations than investors
  • The definition of "top N" requires careful selection (typically top 50, 100, or 200 addresses)
  • Excludes holdings on centralized exchanges where on-chain transactions aren't visible

Parameters

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