On-chain data suggests the $28,100 level could be the next major resistance to break for Bitcoin if history is anything to go by.
Bitcoin Short-Term Holder Cost Basis Is Valued At $28,100 Currently
As pointed out by an analyst in a CryptoQuant post, the BTC price has recently neared the short-term holders’ realized price. The “realized price” is a metric that basically represents the cost basis (that is, the buying price) of the average investor in the Bitcoin market.
When the spot price of the asset dips below this indicator, the majority of the holders go underwater, while breaks above the level naturally result in the average investor moving into a state of profit.
Related Reading: Bitcoin Bullish Signal: Exchange Netflow Remains Negative
In the context of the current discussion, the realized price for only a segment of the cryptocurrency’s user base is of interest; namely, the “short-term holders” (STHs).
The STHs include all investors who have been holding onto their coins since less than 155 days ago. This cohort is one of the two main groups in the BTC market; the other one being the “long-term holders” (LTHs).
The STHs are generally the more fickle investors, who easily react to changes in the wider market (like crashes or rallies), while the LTHs tend to stay silent regardless of the wider sentiment.
Now, here is a chart that shows the trend in the Bitcoin realized price for both of these groups over the last few years:
The asset's price seems to have come near the indicator's value in recent days | Source: CryptoQuant
As displayed in the above graph, the BTC spot price has surged closer to the STH realized price with the cryptocurrency’s latest rally following the news of the Grayscale victory.
Historically, the retests of this level have been very often significant for the cryptocurrency, as they have generally set the tone for what trend the asset could follow in the near future.
During bullish periods, the cost basis of the STHs usually provides support to the price, while the coin may encounter resistance at the line during bearish regimes.
This pattern can also be seen working in action during this year’s rally, as Bitcoin found support at the line during the retests in both March and June. With the recent crash, however, Bitcoin finally plunged under the level.
It’s possible that a return toward a bear market has now occurred because of this failed retest. Currently, the Bitcoin STH realized price is valued at about $28,100, which is actually the highest BTC has gone during the latest surge.
Since Bitcoin has observed a pullback, it’s possible that it’s because of the resistance that the STH cost basis provided. If BTC continues to surge in the coming days, another retest of this level might be one to watch for, as a rejection might confirm a bearish transition. A successful break, however, could suggest that the bullish momentum isn’t dead just yet.
Following the latest surge, Bitcoin is now trading around the $27,400 mark, with investors being in 6% profits over the past week.
BTC has observed a sharp surge recently | Source: BTCUSD on TradingView