bitcoin has approached the $30,000 mark with a strong rally today, but on-chain data suggests the level could provide major resistance.
1.49 million addresses purchased around the $30,000 level
According to data from the market intelligence platform In the block, the most significant potential resistance for btc lies at current levels. The “resistance” here does not refer to technical resistance, but to chain resistance.
From the on-chain perspective, levels are defined as resistance/support based on the concentration of investors/addresses that bought at those levels.
The following table shows what the distribution of holders looks like at this time at the different levels of the asset:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-is-knocking-on-the-door-of-30000-but-can.jpeg" alt="bitcoin resistance” width=”1299″ height=”467″ loading=”lazy”/>
The data for the various on-chain resistance and support levels | Source: IntoTheBlock
Generally, whenever the asset price retests an investor’s cost basis, it is more likely to show some type of movement. If this retest is done from below, i.e. the holder had made losses before this, they might be tempted to sell up to the breakeven point.
On the other hand, a price drop towards their acquisition price may lead them to buy more of the asset, as they might think that if these same levels proved profitable before, they could do so again in the near future.
The larger the group of investors who have their cost base within a specific price range, the more pronounced effects like these will be. Therefore, ranges above the price could be considered sources of resistance, while those below can serve as support.
As seen in the chart above, the $29,800 to $30,700 range is particularly rich in directions right now. To be more specific, around 1.49 million addresses bought their coins here.
Naturally, this means that bitcoin could find it problematic to cross above this range, as has already happened over the past year. “At the same time, 73% of bitcoin addresses are currently in profit,” notes IntoTheBlock, as all lower ranges currently have thick green bands.
While the range will be difficult to break, at least strong support underneath means the cryptocurrency could continue testing until it can finally find a breakout. If btc can indeed break out of the range, it shouldn’t have much resistance at higher levels as not many investors have their cost base there.
A positive sign of the current rally could be the fact that it is not driven by the derivatives side, such as a analyst has pointed out in X.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/1697829567_621_Bitcoin-is-knocking-on-the-door-of-30000-but-can.jpeg" alt="bitcoin Open Interest” width=”1800″ height=”1013″ loading=”lazy”/>
The value of the metric has been going down in recent days | Source: @jimmyvs24 on X
The chart above shows the data of the relationship between bitcoin open interest and market capitalization. The “open interest” here is a measure of the total number of btc contracts open in the futures market.
The value of the indicator has recently decreased, implying that open interest has decreased relative to market capitalization. This could suggest that the current rally is driven by spot purchases.
btc Price
bitcoin is currently within the major resistance range discussed above as its price is trading around $29,900.
<img decoding="async" loading="lazy" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/6IvjVUQf/" alt="bitcoin price chart” width=”1534″ height=”869″/>
The value of the coin has observed a strong surge recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, Glassnode.com
