After beginning the week with a steep drop from around $78,000, the Bitcoin price appears to have found stability near $73,500. However, a recent on-chain evaluation suggests that if a condition is not met, this newfound stability might just be the typical calm that precedes a storm.
Bitcoin’s Key Support Sits Around $72,400
Crypto analyst Darkfost recently took to the social media platform X in a May 29 post to highlight a critical development in Bitcoin’s on-chain dynamics and its impact on the underlying. The relevant indicator here is the “Realized Price excluding >7Y Supply” metric.
For context, the metric tracks the average acquisition cost of all Bitcoin that has moved in the last seven years, excluding long-term dormant coins, to reflect the cost basis of only active market participants.
When Bitcoin trades above this level, it often means that Bitcoin’s most active holders are doing so while enjoying profits. In this case, there is a reduced probability of panic-driven sales occurring at random.
On the other hand, when the Bitcoin price remains below this key level for an extended period, it has historically indicated that active holders are likely facing pressure, as they are holding through unrealized losses. Typically, this scenario can be dangerous for Bitcoin’s price, as investors are increasingly prone to selling off their shares, either to cut losses or to break even.
According to Darkfost, the Realized Price of Bitcoin’s active holders is around $72,400. Interestingly, the Bitcoin price recently slipped below this support level before reversing and beginning to consolidate near $73,500.
In Darkfost’s view, a dip below the aforementioned Realized Price is, in fact, a pattern typical of bear markets. However, the crypto pundit explained that this break below the key support level must be confirmed before any news of a downtrend can be considered factual.
Hence, the flagship cryptocurrency’s near- to mid-term future rests on how it moves in the short-term. If Bitcoin can build bullish momentum from its current consolidation, prices would immediately remain clearly above the average cost basis of its investors.
On the contrary, if the Bitcoin price were to close definitively below $72,400, the flagship cryptocurrency could quickly enter a bearish phase, triggered by a mass sell-off likely to follow. This means market participants should watch BTC’s price action around this key level before making financial decisions.
Bitcoin Price At A Glance
As of this writing, the price of BTC is around $73,540, reflecting a 0.4% decline over the past 24 hours.
from Bitcoinist.com https://ift.tt/ILwa5Sn
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