Bitcoin’s price action has been somewhat limited in recent weeks as the bulls and bears battle for market dominance. This indecision has seen the major cryptocurrency fluctuate between the $89,000 and $93,000 levels in recent weeks.
According to the latest on-chain data, this sideways movement of the Bitcoin price is related to the uneven distribution of the coin’s total supply across different levels. This recent on-chain evaluation has also identified the possible next stop for the market leader’s price.
BTC price threatens to fall by 20%?
In a December 13 post on the X platform, pseudonymous analyst Darkfost said explained that the Bitcoin price is in a battle between $89,000 and $93,000. This on-chain observation is based on the distribution of BTC supply (using the URPD metric) around different price levels.
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The URPD (UTXO Realized Price Distribution) metric tracks the amount of a particular cryptocurrency traded at a specific price level. When a large amount of coins are trading at a certain price level, the region tends to act as support when the price is trading above it, and as resistance when the price is trading below it.
According to Darkfost, this explains why the Bitcoin price appears to be stuck in the $89,000 – $93,000 region (the yellow area in the highlighted chart). The market analyst noted that the zone has seen significant trading activity, which justifies the BTC price fluctuation within this range.
What is new is the “distribution gap” (blue area on the chart) in the $74,000 – $80,000 range, which represents a zone of relatively low historical trading activity. Darkfost explained that these regions of low liquidity tend to pull the Bitcoin price in an attempt to rebalance supply and demand.
As seen in the chart above, this distribution gap is between $74,000 and $80,000, meaning BTC’s price could see a correction to this level before returning to a new high. A correction at this level could equate to a drop of almost 20% from the current price level.
Furthermore, Darkfost noted that 34% of the total BTC supply distribution is now above the psychological level of $90,000. This trend could make $90,000 a structural support level for Bitcoin’s price over time.
It’s also worth noting that while a large distribution cluster is around $84,000, this should not be over-interpreted. Darkfost said the level of distribution is not as real as it seems, but rather the result of Coinbase’s recent Bitcoin move.
Bitcoin price at a glance
At the time of writing, the price of BTC is around $90,150, reflecting no significant change in the past 24 hours.
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Featured image from iStock, chart from TradingView