Bitcoin To $53,200? Why History Says It’s Possible
15 Mars 2024 - 8:00PM
NEWSBTC
As Bitcoin drops below $68,000, history suggests this correction is
rather tame for bull markets, as plunges to this deep on-chain
level have been the norm. Bitcoin Short-Term Holder Realized Price
Is Currently Around $53,200 As pointed out by CryptoQuant
Netherlands community manager Maartunn in a post on X, BTC still
has a decent margin over the realized price of the short-term
holders. The “realized price” is an on-chain metric that keeps
track of the average price at which the Bitcoin investors acquired
their coins. The indicator calculates this value by going through
the transaction history of each coin and assuming that the last
transfer of it was the last time it was purchased (that is, the
price at the time is its current cost basis). Related Reading: Why
Is Bitcoin Price Down Today? 3 Key Reasons When the spot value of
the cryptocurrency dips below the realized price, it means that the
average investor is now in a state of loss. On the other hand, a
break above implies the market as a whole has entered into net
profits. In the context of the current discussion, the realized
price for only a particular segment of the investors is of
interest: the “short-term holders” (STHs). The STHs include all the
investors who bought their coins within the past 155 days. Now,
here is a chart that shows the trend in the Bitcoin realized price
specifically for this cohort: Looks like the value of the metric
has been trending up recently | Source: @JA_Maartun on X As
displayed in the above graph, the Bitcoin STH realized price has
shot up recently as the price of the asset has gone up. This makes
sense, as this group includes the most recent buyers, who would
continuously be buying at higher prices in an uptrend, thus raising
their average cost basis. At present, this cohort’s realized price
is about $53,200. During the past day, BTC has seen a sharp drop
that has taken its price below the $68,000 mark, but clearly, the
STHs would still be in high profits even after this drawdown. “In
previous bull markets, the average cost basis of short-term holders
was fully reset multiple times,” explains Maartunn. This trend is
most prominent in the data for the 2017 bull run when the price
retested this level several times. An interesting pattern that has
been held is that these retests of the level during bull trends
have generally resulted in the cryptocurrency finding support and
turning itself back around. The explanation for this trend may lie
in the fickle nature of the STHs. The cost basis is an important
level for these investors, and when a retest of it happens, they
panic and show some reaction. Related Reading: Brace For Impact:
MicroStrategy Is Planning Another $500 Million Bitcoin Purchase
During uptrends, these holders are more likely to buy more when a
retest of their cost basis occurs since they may think that the
same price levels that were profitable earlier will be so again in
the near future. Naturally, it’s not a certainty that Bitcoin would
also end up retesting this level in this bull market. Still, a
correction might reach close to it if the historical precedent is
anything to go by. BTC Price Following its 7% drop in the past day,
Bitcoin is trading at around $67,700. The price of the coin has
registered a sharp drop over the last 24 hours | Source: BTCUSD on
TradingView Featured image from Maxim Hopman on Unsplash.com,
CryptoQuant.com, chart from TradingView.com
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