bitcoin has deepened its decline in the last day and its price now falls below $63,000. This is where the next potential support is, according to on-chain data.
bitcoin Could Find Support at These Price Levels
in a new mail In X, analyst Ali analyzed what bitcoin's support and resistance levels look like right now based on on-chain data from Glassnode.
The relevant indicator here is the “UTXO Realized Price Distribution” (URPD), which, in short, tells us about the number of coins (or more precisely, UTXO) that were last purchased at any given price level that has visited the asset. in its history so far.
Below is the chart shared by the analyst showing the data of this distribution for the price levels around the recent spot value of the cryptocurrency:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-falls-below-63000-this-is-where-the-next-on-chain.jpeg" alt="bitcoin URPD” width=”2404″ height=”1286″ loading=”lazy”/>
Looks like the $72,880 mark is the level with the richest amount of coins at the moment | Source: @ali_charts on X
In the graph you can see that there are some price levels not far from the current one that stand out especially in terms of the number of purchases that were made at them.
In on-chain analysis, the potential for any level to act as support or resistance is based on the total number of coins that have their cost basis at the level in question.
Levels filled with coins that are situated below the current price are likely to act as support points, while those above the spot value could prove to be walls of resistance.
As evident from the chart, the levels of $61,100, $56,685 and $51,530 are the ones that are below the current price and maintain the cost basis of a notable amount of supply at this time. Naturally, this means that if the decline continues, these would be the levels to watch for a possible rebound.
However, the two upper levels are even higher than these three support levels: the cost base is centered at $66,990 and $72,880. Interestingly, the last one of them is the largest acquisition level of all the price levels listed on the chart, implying that a lot of FOMO buying has occurred at the asset's all-time high levels.
In the scenario that bitcoin regains its upward momentum, these high-cost base population levels would be where the asset might be most likely to encounter some trouble.
Now, the reason takeover centers are considered relevant to support and resistance in on-chain analysis is the fact that investors are likely to show some sort of reaction when their cost basis is retested. .
When such retesting is done from above, holders may decide to accumulate more, believing that the price will rise again in the future. On the other hand, they may sell if the retest is from below, as they may think that breaking even is better than risking another decline.
A large number of coins having their cost basis at the same level means that a potentially large degree of one of these reactions occurs and therefore a strong support or resistance effect on the price.
btc Price
bitcoin is inching closer to the first major on-chain support level as it has now fallen to $62,700.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-falls-below-63000-this-is-where-the-next-on-chain" alt="bitcoin price chart” width=”1534″ height=”854″/>
The price of the asset appears to have plummeted over the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
