One analyst has warned that support levels weaken the more they are retested and bitcoin is now making its third consecutive retest of an important level of this type.
bitcoin tests short-term holder realized price again
As CryptoQuant community manager Maartunn explained in a new article x.com/JA_Maartun/status/1818760182924820837″ target=”_blank”>mail On x, btc’s latest drop has led to another retest of the short-term holder realized price. The “realized price” here refers to an indicator that, simply put, tracks the average cost basis of investors or addresses on the bitcoin network.
When the value of this metric is higher than the spot price of the cryptocurrency, it means that the average investor in the market could be assumed to have a net unrealized gain. On the other hand, when the indicator is below the value of the asset, it suggests the predominance of losses on the blockchain.
In the context of the current topic, we are not interested in the realized price of the entire user base, but in a specific segment of it: short-term holders (STH). STHs include all investors who bought their coins in the last 155 days.
Now, here is a chart showing the trend in bitcoin's realized price for STH over the past few months:
<img src="https://technicalterrence.com/wp-content/uploads/2024/08/Bitcoin-retests-its-historical-support-for-the-third-time-and.jpeg" alt="Price obtained by bitcoin holders in the short term” />
As shown in the chart above, bitcoin’s spot price had dipped below STH’s realized price in June but finally managed to break above the line midway through last month.
In the weeks since then, the asset has seen a couple of pullbacks to the line, but has managed to recover each time. Now, after the latest drop, the coin’s price is retesting the level.
Historically, STH’s realized price has been a reliable support point for the cryptocurrency during bullish periods. The explanation behind this pattern may lie in how investor psychology works.
STHs represent the fickle side of the sector, which is sensitive to changes. Therefore, whenever the price tests their cost basis again, they may be prone to panic moves.
At times when the market mood is bullish, STHs may believe that such a retest is simply a dip opportunity, so they might decide to accumulate more. This could be the reason why bitcoin has found bounces at that level in the past.
While the level has been generally reliable, this latest retest facing btc is already the third in a short period. “Every time a level is tested, it weakens,” notes Maartunn.
It now remains to be seen whether bitcoin STHs still hold a bullish outlook on the cryptocurrency or whether the constant pullbacks have put fear into their minds.
btc Price
bitcoin has continued its recent bearish momentum over the past 24 hours as its price has dropped another 2% to reach the $64,700 level.
x/oVKE0lto/” alt=”bitcoin price chart” />
