Bitcoin has seen a crash to the $87,000 level in the past day, but if on-chain data is to go by, the plunge could get much deeper.
Bitcoin Has Lost An Important Support Level With The Crash
In a new post on X, the on-chain analytics firm Glassnode has discussed about how some Bitcoin indicators have changed following the plunge in the cryptocurrency’s price.
The first metric that the analytics firm has shared is the Realized Price of the short-term holders. The “Realized Price” keeps track of the cost basis of the average investor or address on the BTC network.
When the spot price of the asset is trading above this indicator, it means the investors as a whole can be considered in a state of profit. On the other hand, it being under the metric implies the dominance of loss in the market.
In the context of the current topic, the Realized Price of only a segment of the userbase is of interest: the short-term holders (STHs), who refer to the investors who purchased their coins within the past 155 days.
Now, here is a chart that shows the trend in the Bitcoin STH Realized Price over the last few months:
As displayed in the above graph, Bitcoin was trading above the STH Realized Price during the last few months, meaning the STHs were enjoying profits, but with the latest crash, the situation has flipped.
The STH Realized Price is equal to $92,500, so at the current spot price, the members of this cohort would be carrying an average loss of more than 6%. “A failure to reclaim STH cost basis could mean continued sell pressure from recent buyers,” notes Glassnode.
As for how far BTC could fall from here, perhaps historical pattern could hold a hint. According to the analytics firm, the post-ATH corrections of May 2021, November 2021, and April 2024 all saw BTC fall one standard deviation below the STH Realized Price.
At present, this price band is situated between $71,000 and $72,000. If the past pattern is to go by, it’s possible that this correction may also lead Bitcoin to near this band.
The Cost Basis Distribution, another metric related to investor cost basis, also highlights this same level as being important for the cryptocurrency.
From the chart, it’s apparent that a substantial amount of investors have their cost basis at various zones above $87,000. Under this mark, however, very few addresses bought their coins, until the same $71,000 to $72,000 band. “This could mean weaker support in this range, giving bears more control,” explains the analytics firm.
BTC Price
At the time of writing, Bitcoin is floating around $87,200, down more than 7% over the last week.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
Keshav Verma
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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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