Bitcoin On-Chain Data Shows Why $24,700 Is A Major Resistance For BTC
February 23 2023 - 8:40AM
NEWSBTC
This Bitcoin on-chain indicator may suggest why the $24,750 price
level is an important resistance for the cryptocurrency. Bitcoin
Adjusted Realized Price Is Currently Valued At Around $24,750 The
relevant indicator here is the “realized price,” to understand
which, the “realized cap” needs to be looked at first. The realized
cap is one of the two main capitalization models for Bitcoin (the
other being the usual market cap). According to the realized cap,
the value of each coin in the circulating supply is the price at
which it was last moved (and not the current BTC price, as the
market cap assumes). This means that the model incorporates the
cost basis (the acquisition price) of each investor into the value
of the asset. Now, if this metric is divided by the total number of
coins in circulation, a sort of “realized price” can be obtained.
The significance of this price is that it represents the cost basis
of the average holder in the market. The implication of this is
that if the (normal) BTC price dips below the realized price, the
average investor enters into a state of loss (and a state of profit
for the reverse case). While the realized cap somewhat filters out
coins that haven’t moved in a long time from the valuation of
Bitcoin (as their cost basis will naturally be much lower than that
of more recent coins), they still influence its value. Related
Reading: Bitcoin Rally Fueled By USD Coin (USDC) Rotating Into BTC:
Santiment There is an insignificant portion of the BTC supply that
has simply been lost due to wallet seed phrases being lost. This
supply is likely to never re-enter the market again, meaning that
it shouldn’t really have any effects on the price anymore. To
circumvent this problem, Glassnode has made the “adjusted realized
price” metric, as the on-chain analytics firm explained in its
newly published report. This indicator introduces a simple fix for
the lost coins problem: it doesn’t take into account coins that
haven’t been moved since more than seven years ago. Now, here is a
chart that shows the trend in the adjusted Bitcoin realized price
over the last few years: Looks like the BTC price has been
approaching this level recently | Source: Glassnode As displayed in
the above graph, the Bitcoin price already crossed above the
realized price earlier in the rally, but the coin has only now
reached the adjusted version. The adjusted realized price is
currently $24,750, which is about the level that the asset has been
finding rejection at recently. Interestingly, the April 2019 rally,
which shares a few similarities to the latest rally, also saw a
slowdown when it hit the metric’s line, as is visible in the chart.
Related Reading: Crypto Assets Starting To Become “Overbought,”
Santiment Says Levels like this where a large number of investors
may have their cost basis close to tend to provide resistance
during bearish periods as it is a preferable exit point for such
holders after having suffered unrealized losses during the bear
plunge previously. BTC Price At the time of writing, Bitcoin is
trading around $23,900, down 1% in the last week. BTC consolidates
sideways | Source: BTCUSD on TradingView Featured image from Maxim
Hopman on Unsplash.com, charts from TradingView.com, Glassnode.com
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