On-chain data shows that Bitcoin could get significant support between $66,900 and $68,900, which could help provide solid ground for a new rally to higher levels.
A large number of investors bought their Bitcoin for between $66,900 and $68,900.
According to market intelligence platform data IntoTheBlock, BTC is currently floating above the main demand zone. In on-chain analysis, the strength of any support or resistance level depends on how much “demand” there is.
Related reading
Below is a chart showing different Bitcoin price ranges near the current spot value and how they compare in terms of the total amount of assets purchased by investors.
Here, the pip size is related to the total number of tokens last acquired in the corresponding price range. It appears that outside of these areas, the levels between $66,900 and $68,900 currently host the cost basis for the largest amount of Bitcoin.
More than 2 million addresses received 1.1 million BTC within this range. Since the current spot price of BTC is above these levels, all investors who buy there will make slight profits.
The investor's cost basis is important in on-chain analysis because the level has special psychological importance. A potential retest could flip the holder's P&L balance.
As such, investors may be vulnerable to making some moves when a retest like this occurs. A holder who takes losses before the retest (i.e. the retest occurs from below) may be tempted to sell for fear of a future price decline.
On the other hand, an investor in the green zone before the retest may have reason to believe that the price will rise again, and therefore may decide to accumulate more.
When retests of price ranges are intense with investors, one of these reactions may arise at a range that could be relevant to the broader market, and thus, key demand areas below can act as support points, while those above can act as resistance blocks.
Related reading
Bitcoin has a large support range between $66,900 and $68,900 at the moment, which could help cushion any declines should the asset's price decline.
From the chart, it is also clear that, at the same time, Bitcoin's upcoming ranges are weak with holders. This could, in theory, provide the ideal conditions for a rally to higher levels.
Bitcoin price
Bitcoin rose past the $70,000 level earlier in the day, but the asset has since retreated to $69,100.
Featured image by Dall-E, IntoTheBlock.com, chart from TradingView.com
