- The price of Bitcoin may fall below it Realized price for short-term holders.
- This usually indicates a price bottom and is often followed by a breakout in both directions.
Like bitcoin [BTC] continues to trade within a narrow price range, the price of the leading coin is about to drop below its short-term holders realized price (STH RP), data from CryptoQuant revealed.
Source: CryptoQuant
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BTC’s STH RP metric tracks the average price at which the coin was acquired by investors who have not held their assets for more than 155 days (short-term holders). It is used to assess the profitability of this cohort of coin holders’ investments.
As a pseudonymous CryptoQuant analyst Chained noted, “the significance of this indicator is reflected in its ability to act as a potential support level” as it can be used to identify potential market bottoms.
Historically, when the price of BTC falls below the STH RP, it indicates that short-term holders have started selling their holdings at a loss. Analysts interpret this as a sign of capitulation or a loss of confidence in the market, and is often followed by a “substantial correction”.
With BTC approaching this support line in the current market, the CryptoQuant analyst noted:
“This observation is not insignificant, as this price forms the cost base of short-term investors. These investors, who own a substantial portion of bitcoins in circulation, are generally characterized by their skepticism and heightened reaction to price volatility.”
Breakout in which direction?
With the price of BTC approaching the STH PR, a bottom could be on the horizon. With significant resistance from the leading coin at the $30,000 price level, capitulation from “weak hands” could attract new demand. This can help increase the value of the coin.
An assessment of BTC’s price movements on a daily chart revealed that accumulation has not slowed down. Key momentum indicators showed that holders have continued to buy BTC. At the time of writing, the currency’s Money Flow Index (MFI) was moving closer to overbought territory at 75.74.
Read Bitcoin [BTC] Price Forecast 2023-24
Similarly, the Chaikin Money Flow (CMF) rested above the neutral line at 0.12. A positive CMF reading is a sign of strength in the market. It means that the necessary liquidity is provided to drive up the price of the coin.
However, the coin’s Relative Strength Index (RSI) stalled at 49.06. Staying below the midline meant that while there was increasing buying pressure in the market, the price of BTC refused to respond due to the poor market sentiment.
Source: BTC/USDT on TradingView
Sentiment must improve for an upward price correction. According to SanitationBTC’s weighted sentiment has been mostly negative since May.
Source: Sentiment