On-chain data shows Bitcoin is retesting a historically significant support level after the latest plunge in the asset’s price has gone through.
Bitcoin Is Currently Retesting The Short-Term Holder Realized Price
As explained by CryptoQuant community manager Maartunn in a new on X, BTC has returned to the Realized Price of the short-term holders with its drawdown.
The “Realized Price” here refers to an on-chain indicator that, in short, keeps track of the acquisition price or cost basis of the average investor in the Bitcoin sector.
When the value of this metric is greater than the cryptocurrency’s spot price, the holders are in a state of net unrealized loss right now. On the other hand, being below the asset’s value implies dominance of profits in the market.
In the context of the current discussion, the Realized Price of the entire market isn’t of interest, but that of only a segment of it: the short-term holders (STHs). The STHs include all investors who bought their BTC within the past 155 days.
Now, here is a chart that shows the trend in the Bitcoin Realized Price specifically for the STHs over the past month:
The above graph shows that the Bitcoin spot price has declined towards the STH Realized Price in its latest drawdown. This would mean that the break-even point of the STHs is now being retested.
Historically, this retest has proven to be quite important for the cryptocurrency. The line has served as a transition boundary between bearish and bullish periods.
Generally, when the asset is in the region above the STH Realized Price, retests of the indicator lead to it reversing back up. Similarly, the line acts as resistance when the coin is under it. The explanation behind this curious pattern may lie in investor psychology.
The STHs are the fickle-minded hands of the market, who easily react to movements in the asset. As such, they are naturally sensitive to retests of their cost basis and may make moves when they happen.
When the atmosphere in the sector is bullish, the STHs usually look at their cost basis as a buying opportunity. This is why the level acts as support during bullish periods. In times of bearish sentiment, these investors may panic sell at their break-even instead, thus providing resistance to the asset.
The Bitcoin spot price had managed to break through this resistance earlier in the month, but with the plunge, it’s now retesting it again. It remains to be seen if support holds here, confirming the prevalence of a bullish mentality, or a dip under it happens, thus suggesting a transition to a bearish market.
BTC Price
At the time of writing, Bitcoin is trading at around $64,800, down more than 2% over the past 24 hours.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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