One analyst pointed out how Bitcoin recently closed below a historically important on-chain level, which failure to reclaim could spell trouble for Bitcoin.
Bitcoin fell below its short-term holder cost basis in the recent crash
In new mail At
“Price Realized” here refers to an on-chain indicator that tracks the price at which the average investor on the Bitcoin network received their coins. In other words, it measures the average cost basis of the BTC market.
When the spot value of a cryptocurrency is below this measure, it means that the average investor in the market is holding their coins at a loss at the moment. On the other hand, being above the index indicates that stockholders as a whole are currently in the green zone.
In the present topic, the realized price of the entire Bitcoin market is not of interest, but only to a subsection: Short Term Holders (STH).
STHs are BTC investors who have purchased their coins within the past 155 days. These holders represent the inconsistent side of the market, who easily show reaction whenever a change such as a crash or rally occurs in the sector.
Now, here's a chart showing the trend in price achieved specifically for these investors over the past year:
The price of the asset appears to have seen a cross under this metric in recent days | Source: @JA_Maartun on X
The realized price of Bitcoin STHs is trading around $58,500. During the recent crash, Bitcoin fell below $57,000, meaning the decline put these investors under pressure.
Historically, the average cost basis of STHs has been important for the cryptocurrency, alternating in acting as support and resistance, depending on the market phase.
During uptrends, this measure often acts as a support point. The chart shows that when Bitcoin fell near this level earlier in the year, it found a rebound.
The gauge acts as resistance during bear markets, keeping the price below it. These patterns may be related to how investor psychology works.
In bullish periods, STHs may view their cost basis as a profitable buying opportunity, so they accumulate during dips in it, helping the price turn around. In bear markets, these investors can view the level as an exit point, as they may not believe the price will rise any further.
After closing below the previously achieved STH price, Bitcoin is now struggling to regain this historical level. It now remains to be seen whether support will be found again or if the level will actually be lost.
Bitcoin price
Bitcoin once again rose above the realized price of STH, trading above $59,300. This is certainly a sign in the positive direction, but it is difficult to say whether this recovery will continue.
Looks like the price of the coin hasn't yet recovered much since the crash | Source: BTCUSD on TradingView
Featured image by Maxim Hopman on Unsplash.com, CryptoQuant.com, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on buying, selling or holding any investments and investing naturally carries risks. We advise you to conduct your own research before making any investment decisions. Use the information provided on this website entirely at your own risk.