bitcoin has seen a drop over the last day, taking the price of the asset below $67,000. Here is the historical support level that the asset could visit next.
bitcoin is now not far from the price realized by the short-term holder
As analyst James Van Straten noted in a x.com/jvs_btc/status/1800183675625111890″ target=”_blank” rel=”nofollow”>mail On x, the realized price of short-term bitcoin holders has been rising recently and currently sits around the $64,000 level.
“Realized Price” here refers to an on-chain metric that tracks the cost base of the average investor in the btc market. This indicator is based on the “realized limit” model for the cryptocurrency.
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When the spot price of the asset is greater than the realized price, it means that investors are making some net unrealized profits at this time. On the other hand, the value of the currency according to the metric suggests the prevalence of losses in the market.
In the context of the current topic, the Realized Price of a specific segment of the sector is of interest: Short-Term Holders (STH). STHs include all investors who purchased their coins in the last 155 days.
Here is a chart showing the trend in the realized price of bitcoin STHs over the past few years:
As shown in the chart above, the realized price of bitcoin STH rose rapidly during the rally towards the all-time high price (ATH) at the beginning of the year. Naturally, this trend makes sense, as STHs represent new investors in the market, who would have had to buy at higher prices as the asset rose, thus raising the cohort average.
Since btc's consolidation phase after the March ATH, the indicator's uptrend has slowed, but its value is still increasing. After the latest surge, the metric has approached $64,000.
Now, what does the Realized Price of STHs mean? Historically, this indicator has taken turns acting as an important support and resistance line for the cryptocurrency.
During bullish periods, this metric can facilitate bottom formation for the cryptocurrency, thus keeping it above itself, while downtrends typically see the line act as a barrier preventing the coin from escaping above. she. Transitions beyond this level have generally reflected a currency reversal trend.
This apparent pattern has probably persisted because STHs, being relatively inexperienced hands, can be quite reactive. Cost basis is an important level for any investor, but this group, in particular, is more likely to panic when their cost basis is retested.
When market sentiment is bullish, STHs might decide to buy more when the price falls to their average cost basis, believing that the drawdown is simply a “drop” opportunity. However, in bearish phases, they may react to a new test with panic selling.
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The chart shows that bitcoin found support around this line during the late April/early May decline, potentially implying that bullish sentiment has remained dominant.
Given that btc fell below $67,000 the previous day and STH's realized price closed at $64,000, it will be interesting to see how a potential retest would play out this time.
btc Price
At the time of writing, bitcoin is trading at around $66,800, a drop of over 3% in the last week.
Featured image by Dall-E, Glassnode.com, TradingView.com chart
