Bitcoin (BTC) Has Strong On-Chain Support Between $61,900 & $63,800

Bitcoin has continued its recent bearish trajectory during the past day as the asset's price has now slipped under $64,000. Here's what the next support looks like for BTC.

Bitcoin price has remained under pressure during the past week as the asset continues to trade within a bearish trend. After slipping below the $64,000 level a day ago, BTC has now entered a critical on-chain demand zone.

Here’s what the next support looks like for Bitcoin (BTC) as the coin continues to trade within a bearish trend.

Bitcoin Has Strong On-Chain Support Between $61,900 & $63,800

According to data from the market intelligence platform IntoTheBlock, BTC is now trading just above a critical on-chain demand zone.

Demand zones are price ranges where a large number of investors last bought their coins. These ranges can be identified through on-chain analysis, as the average cost basis of each address on the network can be easily calculated from its transaction history.

Below is a chart shared by the analytics firm that shows the different price ranges around the current asset price in terms of the present demand.

The size of the dot on the graph here corresponds to the number of addresses that bought within the respective range. It can be seen that Bitcoin currently has strong demand zones both just above and below itself.

The lower range, as per IntoTheBlock data, currently holds the cost basis of around 1.23 million addresses for investors who bought 319,700 BTC. But what does a demand zone like this matter?

Well, to any investor, their cost basis is important, and as a result, when the price tests it, they may be more likely to make a move.

Naturally, if many holders share their break-even level within a narrow range, the response to a retest from it would also be strong.

For this reason, zones of major demand are said to act as strong support or resistance levels for Bitcoin.

Cost basis centers above the price can work as resistance walls, while those below can provide support cushions.

Since BTC, after its recent decline, is hovering just above a major demand zone that spans from $61,900 to $63,800, it’s possible that the range could help the asset bottom out.

As for where the support or resistance effect of these demand zones comes from, the answer lies in investor psychology.

The holders currently in loss may be waiting for the price to hit their cost basis to sell and get out with their initial investment.

This selling that may occur on a retest of many investors’ shared break-even level can provide resistance to BTC.

Similarly, the investors below could react to a retest by buying more, as they might look at the drop as a dip opportunity, hence providing support to the asset.

It now remains to be seen if the support zone between $61,900 and $63,800 would put an end to Bitcoin’s recent bearish momentum.

BTC Price

At the time of writing, Bitcoin price trades around $63,600, having faced a steep decline over the past week.