Key Takeaways
Why is the $108k level a major support?
This level represented the average cost basis of the 3-6 month Bitcoin holder cohort, making it a strong support level.
Why can a Bitcoin recovery be difficult?
The area between $116,000 and $117,500 was a supply zone on the price charts and the liquidation heatmap, and the CBD chart showed that holders could sell at a loss during a price rise to break even.
Bitcoin [BTC] saw an increase in spot market trading volume following the October 10 liquidation event.
AMBCrypto reported that Binance spot volume for Bitcoin has stabilized between $5 billion and 10 billion daily. Previously, spot volume was between $3 billion and $5 billion.
An increased number of BTC whale deposits were noted, which could delay a potential price recovery. The poor price developments in October were not a deterrent Strategy [MSTR] of buying Bitcoin for $18.8 million.
The price age bands achieved by UTXO can help identify the behavior of different investor groups.
It represents the average cost basis (realized price) for each specific age category, which refers to when the specific cohort of holders entered the market.
An examination of the price metric realized by UTXO showed that Bitcoin was trading at a critical support level.
Crypto analyst Burak Kesmeci showed BTC prices holding steady at the 3-6 month UTXO realized price of $108.3k.
The price has found support where medium-term holders use their average cost basis. It remains to be seen whether buyers can defend this level of support.
A Bitcoin recovery may face setbacks
The cost base distribution diagram shows the total supply of addresses with an average cost base within specific price ranges.
The supply is represented by the color intensity, while the price segments and time stamps form the other two axes of the graph.
Bitcoin was trading at a support level of $108,000, while significant supply had an average cost basis of just under $108,000.
The CBD chart also highlighted the large amount of overhead in the offering, causing holders to lose out.
A price recovery could be halted by selling pressure from holders who choose to exit the market at breakeven levels.
The liquidation heatmap showed a magnetic zone of $116,000. It is likely that prices will rise in the coming days, but these magnetic zones tend to act as reversal points.
The lack of strong demand could cause a potential BTC recovery to fizzle out around $116,000.
Remember that the $117.5k is also a strong technical resistance level. Such a rejection could leave Bitcoin in the $99,000-$102,000 liquidity position.