As a seasoned crypto investor with over a decade of experience in this wild, volatile market, I can attest to the importance of keeping a keen eye on market indicators that provide valuable insights into short-term trading strategies. The Realized Price of Short-Term Holders (STHs) has proven to be an incredibly reliable tool for me during my journey through the crypto jungle.
A researcher has outlined that a specific Bitcoin network metric, useful for short-term trades, has performed exceptionally well over the last month.
Bitcoin Short-Term Holder Realized Price Has Proven To Be Reliable Recently
In a recent update on platform X, the Community Manager at CryptoQuant, Maartunn, delved into a tool ideal for regular Bitcoin trading. This specific tool they discussed is known as the Short-Term Holders’ Realized Price.
In simpler terms, “Realized Price” refers to a measurement that follows the average cost at which Bitcoin investors or network addresses have bought their coins. When the current market price is higher than this figure, it means collectively, the holders are making a profit. Conversely, if the realized price exceeds this indicator, it suggests that losses are prevalent in the market.
When it comes to the current discussion, we’re focusing on the Realized Price for just a specific part of the market: the short-term investors, often referred to as STHs. The STH group consists of individuals who bought their assets within the last 155 days.
In this context, this group falls under one of the two primary categories in the Bitcoin market that are differentiated by the length of time a Bitcoin is held. The other category is referred to as Long-Term Holders (LTHs).
Here’s a chart provided by the analyst displaying the evolution of the Realized Price for Bitcoin in Stablecoins (STH) over the last month.
In the graph provided, Maartunn has marked every occasion when the Bitcoin price attempted to touch or revisit its Strong Holder’s Realized Price (STH RP). This STH RP seems to have functioned both as a floor (support) and ceiling (resistance) for the cryptocurrency asset.
When the value of a cryptocurrency surpasses a particular line, this new level becomes a source of support. Conversely, if it drops below, the same level transforms into a resistance. This pattern, where the Support/Resistance levels change based on the price movement, is not a recent phenomenon exclusive to the past month; rather, it’s a recurring one observed throughout the history of the STH Realized Price.
It’s possible that the reason the indicator indicates such fluctuations with the coin’s price has something to do with market psychology, specifically the behaviors of more emotional or unpredictable investors known as STHs. These investors often react strongly to price tests near their initial investment cost, which can cause price volatility.
When Bitcoin approaches its Realized Price from a higher level, some investors might choose to acquire additional assets, believing that this price point could yield profits again in the future. This accumulation helps bolster the Bitcoin price by offering support.
In my analysis, should Support Temporary Highs (STHs) encounter a retest from below, it’s plausible they might sell due to concerns about potential near-term losses. By doing so, they aim to exit at the break-even point, ensuring they recoup their initial investment.
Although the Bitcoin STH Realized Price generally holds some credibility, it may exhibit occasional discrepancies. As you can see on the graph, an unusual event like this outlier happened quite recently within the current month.
BTC Price
Currently, as I’m typing this, Bitcoin is hovering near $65,700, marking an increase of over 5% within the past week.
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2024-10-16 17:10