As an experienced analyst with a deep understanding of the Bitcoin market, I believe that the current trend towards the Realized Price of short-term holders is a significant development. The Realized Price is an essential on-chain metric that reflects the average price at which investors acquired their coins. When BTC‘s spot price is close to this level for short-term holders (STHs), it suggests that these investors are sitting on small profits or, in some cases, holding a position just above their cost basis.
Bitcoin‘s on-chain data indicates that it is nearing the “Realized Price” for short-term investors. Historically, Bitcoin returning to this level has carried significance for the cryptocurrency.
Bitcoin Is Close To Seeing A Retest Of Short-Term Holder Cost Basis
In his latest entry on X, CryptoQuant’s Head of Research, Julio Moreno, explores how Bitcoin (BTC) has approached the Realized Price for short-term investors lately.
The term “Realized Price” in this context signifies an on-chain metric that essentially monitors and calculates the average purchase price of Bitcoins for investors or Bitcoin address holders on the network.
As a researcher studying the cryptocurrency market, I’ve discovered an intriguing metric: when the spot price of a cryptocurrency surpasses this benchmark, it indicates that the typical investor in the market is currently enjoying some profits. Conversely, if Bitcoin’s value falls below this indicator, it suggests that losses are more prevalent among investors.
When the total unrealized profits and losses for all market participants are identical, it’s reasonable to assume that the market as a whole is neither making nor losing money overall. In this scenario, investors could be viewed as collectively breaking even on their investments.
When discussing the current subject, it’s important to note that we’re concentrating on the selling prices realized by a particular segment of the market: short-term investors (STIs). These investors are defined as those who acquired their assets within the previous 155 days.
As a seasoned crypto investor, I’ve been closely monitoring the trends in the realized price of Bitcoin STHs (Short-Term Holders) over the last few years. This chart illustrates how much each cohort of Bitcoin investors paid on average for their holdings at the time they sold with taxes and transaction fees accounted for. Understanding this data can provide valuable insights into market sentiment and potential price movements.
The graph indicates that the current Bitcoin price is not far from the Realized Price for the STHs (Short-Term Holders). Consequently, the profit margin for these investors is narrow, despite their presently enjoying profits.
As a crypto investor, I’ve noticed that the recent downturn in the market may lead us back to the average cost basis of our cryptocurrency holdings. Historically, returning to this benchmark has been significant for the value of my investments in this asset class.
Moreno’s chart indicates that the asset’s spot value has interacted with this particular level on numerous occasions over the past two years, as shown by his markings. Notably, during two of these instances (signified by green circles), the coin experienced a bounce-back and resumed its bullish trend after finding support at this level.
In analyzing the price trends of Bitcoin, I’ve noticed that in three instances marked by red circles, Bitcoin did not retest the previous resistance levels after reaching new highs. Instead, it experienced corrections ranging from 8% to 12%. The most recent occurrence of this trend took place at the end of April and beginning of May.
As a potential retest for the cryptocurrency looms, it will be intriguing to observe which pattern unfolds on this occasion. Should the support level succumb to a breakdown, the analyst cautions that the price may dip down to approximately $60,000.
BTC Price
At the time of writing, Bitcoin is trading at around $65,400, down over 6% in the past week.
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2024-06-18 07:17