One analyst noted that Bitcoin recently closed below historically significant on-chain levels and that the failure to recover could spell trouble for Bitcoin.
The recent crash has pushed Bitcoin below its short-term holding cost basis.
new post Martin discussed the recent closing price of BTC below the realized price for short-term holders on X and emphasized the importance of Bitcoin in the rebirth.
“Realized price” here refers to an on-chain indicator that tracks the price at which the average investor on the Bitcoin network acquired their coins. In other words, it measures the average cost base of the BTC market.
If the spot value of a cryptocurrency is below this indicator, it means that the average investor in the market is currently holding the coin at a loss. On the other hand, a rise above the indicator indicates that the entire holder is currently in the green.
In the current topic, we are not interested in the realized price of the Bitcoin market as a whole, but only in a subsection: short-term holders (STH).
STH is a BTC investor who purchased coins within the last 155 days. These holders represent an inconsistent side of the market and react quickly when changes occur in the sector, such as crashes or gains.
Here is a graph showing the trends in realized prices over the past year specific to these investors.
The price of the asset appears to have seen a cross under this metric in recent days | Source: @JA_Maartun on X
The realized price of Bitcoin STH is fluctuating around $58,500. In the recent crash, Bitcoin fell below $57,000, meaning the crash has put pressure on these investors.
Historically, the average cost base of STH has been important for cryptocurrencies as it alternately acts as support and resistance depending on the market phase.
In bullish trends, this indicator often acts as a support point. This chart shows that Bitcoin bounced back when it fell around this level at the beginning of the year.
This indicator acts as a resistance line in a bear market, keeping the price below it. These patterns may be related to how investor psychology works.
In bullish periods, STH may view the cost base as a profitable buying opportunity, so it accumulates when the cost base falls, helping the price turn around. In a bear market, these investors may consider that level as an exit point because they don't believe prices will rise any further.
After recently closing below the STH realized price, Bitcoin is currently fighting to regain this historic level. It remains to be seen whether support will be found again or whether the level will truly be lost.
BTC price
Bitcoin has outperformed the STH realized price and is trading above $59,300. While this is certainly a sign in the right direction, it is difficult to say whether this recovery will continue.
Looks like the price of the coin hasn't yet recovered much since the crash | Source: BTCUSD on TradingView
Featured image from Maxim Hopman on Unsplash.com, CryptoQuant.com, chart from TradingView.com
