Bitcoin Plunges To $28,500, Will This Historical Support Hold Again?

Keshav Verma

1 year ago

3 mins read

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Bitcoin has plunged toward the $28,500 mark during the past day, which happens to be quite near a historically significant support line.

Bitcoin Is Now Near The Short-Term Holder Realized Price

As pointed out by an analyst in a CryptoQuant post, BTC’s latest drawdown has brought it near the realized price of the short-term holders. The “realized price” here refers to a metric that’s derived from the “realized cap” model of Bitcoin.

The realized cap calculates the total valuation of the asset by assuming that the actual value of any coin in circulation is not the current spot price, but the price at which the coin was last transacted on the chain.

Since the last transfer price of any coin is likely to represent its buying price, this model accounts for the prices that each investor in the market bought their coins, and hence, the realized cap may be looked at as a measure of the total capital that holders have put into the cryptocurrency.

When this model is divided by the total number of coins in circulation, the average cost basis or acquisition price in the market is obtained. This is precisely what the realized price is.

If the Bitcoin spot price goes below this indicator, it means that the average investor has gone underwater. Similarly, breaks above the metric signify a return to profits for the majority of the market.

The realized price can also be defined for specific segments of the market. In the context of the current discussion, one part of the market is of relevance: the “short-term holders” (STHs).

Here is a chart that shows the trend in the Bitcoin realized price for this cohort:

Looks like the value of the metric has approached the price recently | Source: CryptoQuant

The STHs include all investors who bought their coins within the last 155 days. The holders that pass beyond this threshold are termed “long-term holders” (LTHs).

From the chart, it’s visible that with the latest decline, the Bitcoin spot price has come very close to the STH realized price. This would suggest that these investors as a whole are about breaking even on their investment currently.

In the chart, the quant has highlighted how previous retests of this line have gone in this year so far. Interestingly, both back in March and June, the cryptocurrency found support at this metric and observed a sharp rebound.

This is a trend that has historically been seen during bullish periods. The reason behind this curious pattern may perhaps be the fact that the STHs look at their cost basis as a profitable point for accumulating more of the asset in such periods, as they believe that the price would only go up in the near future.

The extraordinary buying pressure at the line may be why the asset finds support at this level as well. This is because the opposite happens during bearish periods, as holders look to escape the market at their break-even point.

It now remains to be seen how Bitcoin’s interaction with the STH realized price will go this time around. Naturally, a successful retest would be a positive sign for the rally, as it would show that these investors haven’t yet lost their bullish conviction in the coin.

BTC Price

At the time of writing, Bitcoin is trading around $28,500, down 3% in the last week.

The value of the asset has plunged | Source: BTCUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, CryptoQuant.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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