Bitcoin experienced a significant drop to around the $87,000 mark in the last 24 hours; however, on-chain data suggests that the decline may deepen further.
Bitcoin Has Broken A Key Support Level With The Drop
In a recent update on X, the on-chain analytics company Glassnode highlighted how certain Bitcoin indicators have shifted following the cryptocurrency’s price drop.
The first metric they discussed is the Realized Price for short-term holders. The “Realized Price” tracks the cost basis of the average investor or address on the Bitcoin network.
When the asset’s spot price is above this indicator, it indicates that investors, on the whole, are in a profit position. Conversely, if it falls below this metric, it suggests a prevailing state of loss in the market.
In this case, the focus is on a specific segment of the userbase: short-term holders (STHs), which refers to investors who acquired their coins within the last 155 days.
Below is a chart depicting the trend of the Bitcoin STH Realized Price over the past few months:
The chart illustrates that Bitcoin traded above the STH Realized Price in the preceding months, implying that STHs were reaping profits; however, the recent crash has altered this scenario.
Currently, the STH Realized Price stands at $92,500, which means that at the existing spot price, this group of holders is facing an average loss of over 6%. Glassnode notes, “A failure to reclaim the STH cost basis could result in ongoing selling pressure from recent buyers.”
Regarding the potential depths of BTC’s fall, historical trends may provide some insight. According to the analytics firm, the post-all-time-high corrections from May 2021, November 2021, and April 2024 all saw BTC drop one standard deviation below the STH Realized Price.
Currently, this price range is situated between $71,000 and $72,000. If historical patterns hold true, this correction could also bring Bitcoin closer to this range.
Another relevant metric, the Cost Basis Distribution, highlights this level as significant for the cryptocurrency as well.
The chart indicates that a significant number of investors have their cost basis above $87,000. However, below this mark, only a few addresses purchased their coins until the same $71,000 to $72,000 band. “This could signify weaker support in this range, giving bears an advantage,” the analytics firm explains.
BTC Price
At the time of this writing, Bitcoin is hovering around $87,200, reflecting a decline of more than 7% over the past week.
