Bitcoin Has Next Major Demand Zone At $56,000: Brace For Impact?
April 16 2024 - 10:00AM
NEWSBTC
On-chain data shows the next major Bitcoin demand zone is around
$56,000, a level BTC might end up revisiting if the decline
continues. Bitcoin Has Next Major On-Chain Support Around $56,000
According to data from the market intelligence platform
IntoTheBlock, BTC’s recent drawdown has meant that it may end up
having to rely on the price range around $56,000 for support.
Related Reading: Bitcoin Whales Showing Different Behavior From
Past Cycles, But Why? In on-chain analysis, a level’s potential as
support or resistance is based on the total number of coins that
the investors last acquired there. Below is a chart that shows what
the various price ranges around the current spot price of the
cryptocurrency look like in terms of this cost-basis distribution.
The data for the BTC acquisition distribution across the various
price levels | Source: IntoTheBlock on X In the graph, the size of
the dot represents the amount of Bitcoin that was purchased inside
the corresponding price range. It would appear that the $63,000 to
$64,890 level is currently thick with investors. To be more
particular, 1 million investors acquired 530,000 BTC inside this
range. Generally, whenever the asset retests the cost basis of any
investor, they may become more likely to make some kind of move,
due to the importance the level holds for them. Investors who were
in profits just prior to the retest may be willing to make further
bets, believing that if this level was profitable in the past it
might be so again in the future. Naturally, this buying effect
would only be relevant for the market if a large amount of
investors acquired coins inside a tight price range. The $63,000 to
$64,890 range qualifies for this. The range should have acted as a
support point for the coin, but BTC has recently slipped under it,
possibly suggesting that this support level may have broken down.
As IntoTheBlock has highlighted in the chart, the next major range
of potential support is the $55,200 to $57,100 range. Thus, should
the current drawdown continue, this may be the next relevant range.
“While this doesn’t mean that Bitcoin has to go this low, it is
good to keep this range in mind while price is exploring recent
lows,” notes the analytics firm. A decline to the average price of
this range ($56,000) would mean a drawdown of almost 10% from the
current spot value of the coin. Related Reading: Bitcoin Rebounds
After Nearing Cost Basis Of Short-Term Whales Before this level,
though, there is another interesting on-chain level that BTC could
end up revisiting. As analyst James Van Straten has pointed out in
an X post, the Realized Price (the average cost basis) of the
short-term holders is around $58,800 right now. Looks like the
value of the metric has been going up since a while now | Source:
@jvs_btc on X The short-term holders (STHs) here refer to the
investors who bought within the past 155 days. This group’s
Realized Price has been at an important level historically during
bull runs, as the asset has often found support at it. Breaks under
it have, in fact, usually led to bearish transitions in the past.
“If we drop below this, I will concede to a bear market similar to
May 2021,” says Straten. BTC Price Bitcoin has registered a decline
of almost 7% over the past 24 hours and in the process, has lost
any recovery it had made earlier. Now, BTC is trading around
$62,100. The price of the asset appears to have been going down
recently | Source: BTCUSD on TradingView Featured image from
Kanchanara on Unsplash.com, Glassnode.com, chart from
TradingView.com
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