Bitcoin has faced another retrace in the past day that has brought its price to the short-term holder cost basis, a level that has acted as support thus far.
In the context of the current topic, the Realized Price of only a specific segment of investors is of interest: the STHs. These are the BTC holders who purchased their coins within the past 155 days. This group is considered to include the fickle-minded bunch of the sector, prone to making panic moves during volatile periods.
Now, here is the chart shared by Maartunn that shows the trend in the Bitcoin Realized Price of the STHs over the last couple of months:
As is visible in the above graph, Bitcoin has made a few retests of the STH Realized Price during the last few weeks and each time, the level has held so far. The reason behind the indicator acting as support lies in how investor psychology tends to work.
By the fourth retest, however, they can become exhausted, and may decide to stop their accumulation. This is when the level stops providing support to the cryptocurrency.
From the chart, it’s visible that the latest retrace in Bitcoin has once again brought its value near the STH Realized Price. Given that this is the fourth retest, Maartunn has noted that this could potentially be the fourth step in the STH cycle.
It will now be interesting to see how the asset’s price develops in the coming days. A sustained move below the level may confirm a breakdown of support and lead to the fifth and final step of the STH cycle, where these investors start looking at their break-even level as an opportunity to exit the market instead, thus turning what was once support into resistance.
Bitcoin dropped to $110,000 earlier in the day, but the coin has since bounced back to $113,000.
