On-chain data shows that bitcoin currently has a thick supply wall between the $60,300 and $62,155 levels that may prevent the asset from falling further.
A large amount of bitcoin was bought near current prices
As analyst Ali explains in a new mail At X, btc has a major support wall just below it right now. In on-chain analysis, the strength of support and resistance levels is measured through the amount of bitcoin that investors purchased from them.
The following chart shows what the distribution of the investor cost base for btc has looked like in the price ranges close to the current spot value:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Is-Bitcoin-Safe-From-Dips-Below-60300-On-chain-data-says.jpeg" alt="bitcoin Support” width=”2342″ height=”850″ loading=”lazy”/>
The amount of bitcoin that the holders bought at the various price ranges | Source: @ali_charts on X
Here, the dot size represents the number of tokens that addresses purchased between the corresponding price levels. From the chart, it is evident that the $60,300 to $62,100 range has a particularly high coin density at the moment.
Most price levels in this range are just below the current spot price of the cryptocurrency, meaning that investors who bought here would make some profits, albeit slight ones.
Generally, when the price retests the cost base of those investors who were in profit before the retest (meaning the price has approached their cost base from above), these directions can produce a buying reaction. .
This is because holders like these may have reason to believe that if they were able to take profits earlier, they could do so again in the near future, so they may simply accumulate into this “dip.”
Naturally, this reaction can provide support for the cryptocurrency. Naturally, the magnitude of this support is not significant if only a few investors bought at the current level to begin with. On the other hand, narrow ranges that are full of directions could prove to be a source of notable support.
In the aforementioned price range, close to the current spot price, one million addresses acquired a total of approximately 671,000 btc. “This accumulation zone highlights strong investor confidence and could serve as a crucial support level for btc, potentially protecting against further declines,” notes the analyst.
While the price ranges below the current price are full of coins, you can see from the chart that this is not the case for the ranges above. Just as supply portfolios below can be a source of support, they can act as resistance when above.
The fact that the supply walls above are quite thin suggests that there would not be too many investors waiting to quickly exit their breakeven point and therefore the selling pressure due to them should be low.
That said, that doesn't mean there isn't any impedance. bitcoin is approaching all-time highs at this point, meaning the vast majority of supply is in profit. At these levels, massive selling to reap these profits may be the main challenge preventing the run from continuing.
btc Price
Currently, bitcoin is trading around the $62,000 level, which means it is right on the edge of the main support wall.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Is-Bitcoin-Safe-From-Dips-Below-60300-On-chain-data-says" alt="bitcoin price chart” width=”1534″ height=”854″/>
Looks like the price of the coin has been sharply going up recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, IntoTheBlock.com, Chart from TradingView.com
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.
