bitcoin has continued its recent bearish trajectory over the past day as the asset's price has fallen below $64,000. This is what the next support for btc will look like.
bitcoin has strong on-chain support between $61,900 and $63,800
According to data from the market intelligence platform x.com/intotheblock/status/1804087197752066418″ target=”_blank”>In the block, btc is floating just above a critical on-chain demand zone. Demand zones refer to price ranges where many investors last purchased their coins.
These ranges can be determined through on-chain analysis, as the average cost basis of each address on the network can be easily calculated through its transaction history.
Below is the graph shared by the analysis firm that shows the different price ranges close to the current price of the asset in terms of current demand.
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On the chart, the size of the dot corresponds to the number of addresses purchased within the respective range. It appears that bitcoin currently has large zones of demand just above and below itself.
According to data from IntoTheBlock, the lower range currently maintains the cost base of around 1.23 million addresses for investors who purchased 319,700 btc. Now, what is the relevance of a demand area like this?
For any investor, your cost base is important, so when price tests it, you may become more inclined to make a move. Naturally, if many forks share their equilibrium level within a narrow range, the reaction resulting from a retest would also be large.
For this reason, areas of greatest demand are considered important support or resistance levels for bitcoin. Cost base centers above price can act as walls of resistance, while those below can provide cushions of support.
With btc sitting just above a major demand zone between $61,900 and $63,800 after its latest drop, it's possible that the range could help the asset bottom out.
As for the source of the support or resistance effect that these demand zones provide, the answer lies in the psychology of the investor. Holders currently in losses may be waiting for the price to reach their cost base to exit their initial investment.
This sale that may appear after a new test of the equilibrium level shared by many investors may represent resistance for btc. Similarly, investors below may react to a retest by buying more as they could see the decline as a downside opportunity, thus supporting the asset.
It now remains to be seen whether or not the support zone between $61,900 and $63,800 would put an end to bitcoin's recent bearish momentum.
btc Price
After the latest drop, bitcoin has just entered the on-chain demand zone as its price is now trading around $63,600.
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