- The realized price of BTC for short-term holders was about to drop below market value.
- Should this happen, the price of BTC could fall further in value.
In the current market cycle, Bitcoin’s unabated decline [BTC] realized price of its short-term holders puts the leading cryptocurrency at risk of a further fall in value, pseudonymous CryptoQuant analyst Crazzyblockk noted in a new report.
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The realized price of BTC refers to the average price that all BTCs were last traded on-chain. It is calculated by dividing the total value of all BTCs by the number of coins in circulation.
The metric is often used to assess the overall health of the BTC market.
Rising realized price indicates that investors are buying bitcoins at a higher price, which is a bullish signal. On the other hand, a falling realized price suggests that investors are selling bitcoins at a lower price, which is a bearish signal.
Short-term holders to determine the next price direction?
In his report, the analyst compared the realized price of BTC from short-term holders in the 2019-2020 price cycle and the current price cycle and found that when the realized price of short-term holders fell below the market price in the previous cycle, the “maximum loss imposed on short-term holders of 1-6 months was about 40-45%.”
In the current price cycle, the realized price of short-term holders remains above the market price. But it was much closer to market price than it was in the 2019 price cycle.
The analyst noted that this meant that short-term holders are not losing as much as in the 2019 price cycle. This was because losses from this investor cohort only ranged from 4% to 9% at the time of writing.
Source: CryptoQuant
Read Bitcoin [BTC] Price forecast 2023-2024
While current market conditions may not be as bearish as they were during the 2019 price cycle, the continued decline in short-term holders’ realized price puts them at risk of further losses. It also puts the general market at risk for a further fall in the price of the king coin.
According to the analyst:
“For the current market conditions, it is imperative that even with a further fall in the price of Bitcoin, this realized value should increase. (This) will indicate a dual interest in holding Bitcoins alongside longer term short term losses.
To avoid any “big price drop”, the analyst further opined:
“This average price, which is now flat, should take an upward slope in the coming months so that Bitcoins dominance in one year leads to support for maintaining Bitcoin’s bullish performance over the long term.”