Bitcoin has witnessed a significant decline over the past day. In this analysis, we explore the nearest on-chain level that Bitcoin might retest if the downturn persists.
Understanding the Realized Price of Short-Term Bitcoin Holders
As highlighted by CryptoQuant analyst Axel Adler Jr, the Realized Price of Bitcoin holders who have possessed their coins for a period ranging from one week to one month is currently the closest support level for the asset. This metric provides valuable insight into the cost basis or acquisition price of the average holder within the Bitcoin network.
The Significance of Realized Price
The Realized Price serves as an on-chain indicator that helps determine whether investors are collectively in a profitable position. When the Realized Price falls below the spot price of Bitcoin, it implies that investors are experiencing net gains. Conversely, if it is below the current BTC value, it signifies that the market is predominantly experiencing losses.
Focus on 1-Week to 1-Month-Old Bitcoin Holders
In this analysis, we concentrate on the Realized Price of a specific segment of Bitcoin holders: those who have held their coins for a period ranging from one week to one month. This particular group represents addresses that have retained their Bitcoin holdings for at least one week and no more than one month.
Recent Trends in Realized Price
According to the chart shared by Adler, the Realized Price for this group of Bitcoin investors has been steadily increasing in tandem with the recent price rally. This trend is expected, considering that the cost basis of these holders has been adjusted to higher levels as new investors enter the market during the rally peaks.
As of now, the Realized Price for this cohort stands at $97,900, indicating that these investors are in profit at the current price. However, just a day ago, Bitcoin’s price briefly dipped below $99,000, bringing it dangerously close to retesting this level.
Short-Term Holders and Market Behavior
The 1-week to 1-month-old investors are a subset of a larger group known as short-term holders (STHs). STHs encompass those who acquired their coins within the last 155 days. Statistically, the longer an investor holds their coins, the less inclined they are to sell. Consequently, STHs, particularly those in the 1-week to 1-month category, represent the holders with the least amount of commitment in the sector due to their relatively short holding periods.
Market Reactions and Support Levels
Given their volatile nature, STHs often react when their average cost basis is retested by the Bitcoin price. This reaction might manifest as buying during a retest from above, as these holders might perceive the decline as a mere ‘dip.’ Therefore, the Realized Price for the 1-week to 1-month-old STHs, currently below the market price, could serve as a crucial support level for Bitcoin. Notably, this level has already played a supportive role for the asset earlier this month.
Bitcoin’s Price Recovery and Future Outlook
Bitcoin has been experiencing a recovery from the recent drop. However, if bearish momentum resurfaces, it would be prudent to monitor the potential retest of this support level, given historical patterns.
Current Bitcoin Price Analysis
At the time of writing, Bitcoin is trading around $102,200, marking a decline of nearly 3% in the past 24 hours. The coin’s price has been on an upward trajectory over the last few weeks, reflecting the overall market sentiment.
