History suggests that Bitcoin’s drop below $68,000 is a relatively mild correction for bull markets. Plunges this deep have occurred on a regular basis.
Bitcoin’s short-term holder realized price is currently around $53,200
Maartunn, community manager at CryptoQuant Netherlands in A post BTC is still a fair distance ahead of what short-term traders are able to realize.
The “realized priceThe “on-chain” metric keeps track of average prices at which Bitcoin investors purchased their coins. The indicator determines the value of each coin by analyzing the transactions of the coins and taking into account that its most recent transfer was when it was last purchased.
The average investor loses money when the value of a cryptocurrency falls below the actual price. A break above indicates that the entire market has made a profit.
The current discussion is focused on the price realized by only one segment of investors: “short-term holders” (STHs). STHs are all those investors that have purchased coins during the last 155-day period.
This chart shows the Bitcoin realized price trend for that cohort.
Source:| Source: @JA_Maartun on X
The graph above shows that the Bitcoin STH realized prices have risen in recent times as the value of the asset increased. It makes sense that this group would include the latest buyers who will continue to buy at higher prices during an upward trend, increasing their cost-basis.
Currently, the realized price for this cohort is $53,200. BTC’s price has dropped sharply in the last day and is now below $68,000. However, STHs are still making a lot of money even with this drop.
“In previous bull markets, the average cost basis of short-term holders was fully reset multiple times,” explains Maartunn. The data from the bull market of 2017 shows this trend most clearly, when price levels were retested several times.
A pattern has emerged that shows that these retests during bull trend have resulted generally in finding support for the crypto and turning it around.
It is possible that the STHs are fickle. These investors are concerned about the cost basis. When it is retested, they react with panic.
They may believe the price levels which were profitable in the past will continue to be profitable for them.
In this current bull market, Bitcoin is not guaranteed to reach this previous level. If history is any guide, then a small correction could reach this level.
BTC price
Bitcoin has dropped 7% in the last day and is now trading around $67,000.
Over the past 24 hours, the price of this coin has dropped dramatically | Source: BTCUSD on TradingView
Featured images from Maxim Hopman at Unsplash.com and CryptoQuant.com. Charts from TradingView.com
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