Data shows Bitcoin (BTC) needs to break below $20,000 to reset a key indicator covering speculative profit taking.
The latest edition of our weekly newsletter states:The week on chainAnalysis firm Glassnode has revealed that short-term holders (STH) may be dictating price resistance in BTC.
Taking Profit Strengthens Resistance Levels
As BTC/USD climbs towards $25,000, we’re starting to see STH (hold the coin within 155 days) in substance.
This was captured by the Market Value vs. Realized Value (MVRV) metric, which compares Bitcoin’s market capitalization to the value of coins that have moved on-chain.
“By comparing these two metrics, MVRV can be used to understand whether prices are above or below ‘fair value’ and assess market profitability,” Glassnode explained in an accompanying document. doing. guide.
MVRV hit a multi-month high above 1.2, coinciding with $23,800 emerging as an area of BTC price resistance.
As Glassnode writes, “STH’s profitable probability tends to increase for periods when the average STH is 20% or more, returning an STH-MVRV greater than 1.2.”
“The recent rejection at the $23.8k level resonates with this structure as STH-MVRV reached a value of 1.2 before stalling,” he continued this week.
“If the market returns to $19.3k, the STH-MVRV value will return to 1.0, indicating that the spot price has returned to the cost base for this cohort of new buyers.”
$19,300 therefore forms an attractive target in terms of profitability and incentives not to sell STH.
As Cointelegraph reported, Glassnode isn’t the only one suggesting it. $20,000 may not hold as support for BTC/USD and a new local low may form below that line.
Bitcoin in “transition phase”
Meanwhile, Glassnode’s crosshairs also include the long-term holder (LTH) cost base and activity of whales investing in Bitcoin since the end of the last bear market in late 2018.
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The realized price of so-called ‘old’ supply – the price last moved in aggregate – is now $23,500, further strengthening the region as a key battleground.
On the downside, Bitcoin’s total realized price is $19,800, which has influenced the idea that this zone could eventually form support.
“Bitcoin’s economy often responds not only to levels widely observed in traditional technical analysis, but also to baseline levels of psychological costs for the various investor cohorts printed on the chain. is not only about the realized price, but also about the extent of gains and losses within the supply,” concluded Glassnode.
“From this lens, the market is currently in transition, bounded by realized prices for old supply and average whales operating from the bottom of the 2018 cycle.”
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