Bitcoin Is Currently Retesting The Short-Term Holder Realized Price

As explained by CryptoQuant community manager Maartunn in a new post on X, BTC has returned to the Realized Price of the short-term holders with its drawdown.

Bitcoin’s latest price plunge has brought the asset back to a historically significant support level, on-chain data shows.

On-chain analysis firm CryptoQuant now observes that BTC has returned to the Realized Price of the short-term holders with its drawdown.

As explained by CryptoQuant community manager Maartunn in a new post on X, the “Realized Price” is an on-chain indicator that denotes the average acquisition price or cost basis of all investors in the Bitcoin market.

When the value of this metric is higher than the cryptocurrency’s spot price, the holders are in a state of net unrealized loss at the moment. Conversely, being above the asset’s price indicates dominance of profits in the market.

In the context of the current discussion, the realized price of the entire market isn’t of interest, but that of only a segment of it: the short-term holders (STHs). The STHs include all investors who bought their BTC within the past 155 days.

Now, here is a chart that shows the trend in the Bitcoin Realized Price specifically for the STHs over the past month:

As you can see in the above graph, the spot price of Bitcoin has declined towards the STH Realized Price in its latest drawdown. This would mean that the break-even point of the STHs is now being retested.

Now, this retest has historically proven to be quite important for the cryptocurrency. The line has served as a transition boundary between bearish and bullish periods.

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Usually, when the asset is in the region above the STH Realized Price, retests of the indicator lead to it reversing back up. Similarly, the line acts as resistance when the coin is below it. The logic behind this curious pattern may lie in investor psychology.

The STHs are the weakest hands of the market, who easily react to movements in the asset. Hence, they are naturally sensitive to retests of their cost basis and may make moves when they happen.

In bullish market atmospheres, the STHs typically view their cost basis as a buying opportunity. This is why the level acts as support during bullish periods. In times of bearish sentiment, these investors may panic sell at their break-even instead, thus providing resistance to the asset.

The Bitcoin spot price had managed to break through this resistance earlier in the month, but with the plunge, it’s now retesting it again. It remains to be seen if support holds here (indicating a bullish market) or a dip under it happens (suggesting a transition to a bearish market).

BTC Price

At the time of writing, Bitcoin is trading at around $64,800, down more than 2% over the past 24 hours.