On-chain data shows that bitcoin's next major demand zone is around $56,000, a level that btc could end up revisiting if the decline continues.
bitcoin Has Next Major On-Chain Support Around $56,000
According to data from the market intelligence platform twitter.com/intotheblock/status/1779886019854184825″ target=”_blank” rel=”nofollow”>In the blockbtc's recent drop has meant that it may end up having to rely on the price range around $56,000 as support.
In on-chain analysis, a level's potential as support or resistance is based on the total number of coins investors last purchased there. Below is a chart showing what the various price ranges around the cryptocurrency's current spot price look like in terms of this cost distribution.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/Bitcoin-Has-Next-Major-Demand-Zone-at-56000-–-Brace.jpeg" alt="bitcoin On-Chain Cost Basis” width=”1721″ height=”359″ loading=”lazy”/>
The data for the btc acquisition distribution across the various price levels | Source: twitter.com/intotheblock/status/1779886019854184825/photo/1" target="_blank" rel="nofollow">IntoTheBlock on x
On the chart, the size of the dot represents the amount of bitcoin that was purchased within the corresponding price range. It would appear that the $63,000 to $64,890 level is currently full of investors. To be more specific, 1 million investors acquired 530,000 btc within this range.
Generally, whenever the asset retests any investor's cost base, he is more likely to make some type of move, due to the importance the level has for him.
Investors who made profits just before the retest may be willing to place more bets, believing that if this level was profitable in the past, it could be profitable again in the future.
Naturally, this buying effect would only be relevant to the market if a large number of investors purchased coins within a tight price range. The range of $63,000 to $64,890 qualifies for this.
The range should have acted as a support point for the coin, but btc has recently fallen below it, possibly suggesting that this support level may have been broken.
As IntoTheBlock has highlighted on the chart, the next major range of potential support is the $55,200 to $57,100 range. Therefore, if the current drawdown continues, this could be the next relevant range.
“While this doesn't mean bitcoin has to drop this low, it's good to keep this range in mind as the price explores recent lows,” the analytics firm notes. A drop in the average price of this range ($56,000) would mean a reduction of almost 10% from the current spot value of the coin.
However, before this level, there is another interesting level on chain that btc could end up revisiting. As analyst James Van Straten has pointed out in an twitter.com/intotheblock/status/1779886019854184825/photo/1″ rel=”nofollow”>mailThe realized price (average cost basis) of short-term holders is around $58,800 right now.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/1713280663_566_Bitcoin-Has-Next-Major-Demand-Zone-at-56000-–-Brace.jpeg" alt="Price made by bitcoin holder in the short term” width=”1215″ height=”681″/>
Looks like the value of the metric has been going up since a while now | Source: twitter.com/jvs_btc/status/1779844913355538708/photo/1" target="_blank" rel="nofollow">@jvs_btc on x
Short-term holders (STH) here refer to investors who bought in the last 155 days. The realized price of this group has historically been at an important level during bull runs as the asset has often found support there.
In fact, breakouts below this level have generally led to bearish transitions in the past. “If we fall below this level, I will accept a bear market similar to May 2021,” Straten says.
btc Price
bitcoin has recorded a drop of almost 7% in the last 24 hours and, in the process, has lost any recovery it had made before. Now, btc is trading around $62,100.
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The price of the asset appears to have been going down recently | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, Glassnode.com, TradingView.com chart
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.
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