On-chain data shows Bitcoin is fast approaching the cost basis of the short-term holders, a retest of which could potentially change the asset’s course.
Here is the chart shared by the analyst that shows the trend in the Bitcoin STH Realized Price over the past year:
As displayed in the above graph, the Bitcoin STH Realized Price has gone up recently as investors have participated in trading at the post-rally prices. Today, the average cost basis of the holders who purchased in the past five months sits at $107,000.
Earlier, the cryptocurrency was at a comfortable distance above this line, but the latest bearish momentum has meant that its price has come dangerously close to a retest of it.
Historically, the STH Realized Price has often acted as an important psychological barrier for Bitcoin. The reason behind the trend lies in the fact that the STH cohort represents the weak hands of the market, who tend to easily react to shifts.
Generally, when the market mood is bullish, the STHs react to retests of their cost basis from above by accumulating, believing the ‘dip’ to be worth buying. This can make the level a support line during uptrends. Similarly, in bearish phases, these investors provide resistance by selling into their cost basis, fearing losses.
The STH Realized Price isn’t the only support level nearby for Bitcoin right now. As Adler Jr has highlighted in the chart, the 200-day simple moving average (SMA) of the asset’s spot price is currently situated at $100,700.
Bitcoin fell to a low of around $108,800 during the past day, but the asset has since seen a small jump back to $109,800.
