Bitcoin Price Approaches Critical Support Level, According to CryptoQuant
The price of bitcoin, the leading cryptocurrency by market capitalization, is nearing a crucial support level that could determine its next move, according to data from CryptoQuant, a platform that provides on-chain and market data for crypto investors.
CryptoQuant defines the support level as the average short-term realized price (STH realized price), which is calculated by dividing the realized cap by the total coin supply. The realized cap is the sum of the market value of each coin at the time it was last moved.
The STH realized price is often used as an indicator of support and resistance in the price, as it reflects the average cost basis of short-term holders. In other words, it shows the price level at which most short-term holders are in profit or loss.
According to CryptoQuant, the STH realized price has acted as important support in March ’23 and June ’23, and as important resistance in April ’22, November ’22, and October ’23. However, each time the price broke out of support or resistance, it went one way, with price volatility increased.
The current STH realized price is located at $37,800, and the price is heading towards it. As of writing, bitcoin is trading at around $38,500, down 3.5% in the last 24 hours, according to CoinGecko.
If the price breaks below the STH realized price, it could signal a bearish trend and trigger more selling pressure from short-term holders who want to cut their losses. On the other hand, if the price bounces off the STH realized price, it could indicate a bullish reversal and attract more buying demand from short-term holders who want to increase their profits.
CryptoQuant CEO Ki Young Ju said that the STH realized price is a “very important level” for bitcoin and advised investors to use it as an opportunity to dollar-cost average (DCA) or buy the dip. DCA is a strategy that involves buying a fixed amount of an asset at regular intervals, regardless of the price fluctuations, to reduce the impact of volatility and lower the average cost.
“STH realized price is a very important level for BTC. It’s the average cost basis of short-term holders. If the price goes below this level, we might want to use it as an opportunity to DCA or so,” he tweeted on Monday.
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