On-chain analytics firm Glassnode has revealed how Bitcoin could be at risk of a further drawdown after trading at a significant discount to a key cost basis level.
To any investor, their break-even mark tends to be a level of particular importance, as retests of it can potentially flip their profit-loss situation. Due to this, Realized Price levels have often shown interactions with the asset’s price, as investors make moves to either exit with their money back or buy more to defend their cost basis.
A group that’s considered particularly sensitive to short-term volatility is the STH cohort, made up of the investors who purchased their coins within the past 155 days.
The Realized Price of the STHs generally provides support during bullish trends, but with the recent market crash, Bitcoin has plummeted under it.
As displayed in the above chart, Bitcoin at its post-crash levels is trading significantly below the STH Realized Price located at $112,500. This means that members of the cohort are now notably underwater.
A chunk of the cryptocurrency’s supply has been dormant for so long that it can safely be presumed lost. In other words, these tokens will never make their way back into circulation. Such coins have no effect on the market today, so the Active Realized Price excludes them from the data, labeling them “economically inactive.”
The report noted that this level “has often served as a critical reference point during extended corrective phases in prior cycles.” At present, the indicator is sitting near $88,500.
CryptoQuant has described the line as “a key technical and psychological support level last broken at the start of the 2022 bear market.” Considering that Bitcoin has lost the STH Realized Price, and now, this level as well, it remains to be seen whether the asset will end up retesting the Active Realized Price and other lower support levels.
At the time of writing, Bitcoin is floating around $103,300, down over 6% in the last seven days.
