Here’s The Level Bitcoin Must Conquer If Rally Has To Return

Keshav Verma

Last Updated: June 11, 2024 8:15 am

3 mins read

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Here’s the level, according to on-chain data, that Bitcoin might have to conquer if the rally has to make a real comeback.

Bitcoin Is Currently Near Short-Term Holder Cost Basis

In a new post on X, analyst Root shared a chart revealing that the BTC price has recently been retesting the short-term holders’ cost basis or the realized price (STHs).

The “realized price” here measures the average price at which Bitcoin investors acquired their coins. When the spot price is trading above this indicator, the holders are in a state of profit right now, while below the metric implies the market is in loss.

This realized price is for the entire investor base but can be defined only for specific segments. In the context of the current discussion, the holder group of interest is the “short-term holders” (STHs).

The STHs include all investors who purchased their coins less than 155 days ago. Their average cost basis should, thus, lie inside the price range of the past five months.

Here is a chart that shows how the realized price of the Bitcoin STHs has changed over the past few years:

Looks like the spot price of the asset has approached this metric in recent days | Source: @therationalroot on X

As displayed in the above graph, Bitcoin briefly broke above the STH realized price during the latest rally above the $28,000 level. Still, with the pullback, the cryptocurrency has plunged under the metric again.

The STH cost basis has been historically important for the asset, as breaks above the level generally mean bullish winds. At the same time, plunges under have often brought with them bearish momentum.

But the significance doesn’t end there: the level has acted as support during rallies and has provided resistance in bearish periods. The explanation behind this curious pattern could lie in investor psychology.

While rallies are going on if the BTC spot price drops to the cost basis of the STHs, these investors may tend to believe that the price would once again go up in the future, and so, they might buy more at their cost basis, thinking it to be a profitable buy. This extraordinary buying pressure could be behind the support BTC finds here.

Conversely, bear markets put fear in the minds of the STHs, so as soon as they can break even, they quickly sell and exit, thus providing resistance to the cryptocurrency.

It now remains to be seen whether Bitcoin will make a break above the STH realized price in the coming days, and if it does, whether the price will be able to stay above it for an extended period, unlike the latest attempt.

Bitcoin had been enjoying support at this level during the rally in the first half of the year, so if it can reclaim the line again, it would be an optimistic sign for things to come.

BTC Price

At the time of writing, Bitcoin is trading at around $27,400, up 4% in the last week.

BTC has lost much of its recovery | Source: BTCUSD on TradingView

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