Bitcoin (BTC) risks turning $77,700 into new resistance as recent buyers fall into an aggregate loss, analysis warns.
Key points:
- Bitcoin fell below $77,700, the cost basis of buyers from one to three months ago, which could now become new resistance.
- Profitability data emphasizes a support zone at $68,400, equivalent to a 12% net loss for those buyers.
- Bitcoin short-term holders face slipping into a net loss, with their cost basis at $75,832.
Bitcoin’s $77,700 cost basis could become resistance
Data from onchain analytics platform CryptoQuant shows that BTC/USD is now trading below the realized price, or cost basis, of investors who entered the market between one and three months ago.
It defines this investor cohort as speculative traders who are thus more sensitive to short-term price volatility. Their cost basis historically formed upward-trending support during Bitcoin bull markets.
“When BTC falls below this level, however, the same cost basis can later act as resistance as underwater traders use a return to breakeven as an opportunity to exit,” a CryptoQuant contributor said in Monday’s analysis.
The cost basis, as measured by CryptoQuant’s Trader Onchain Realized Price Bands metric, currently stands at $77,700, while BTC/USD trades at around $76,500.
“What is also notable is that the Trader Realized Price has been rising steadily while BTC has been correcting. The gap between price and the cost basis has now narrowed significantly,” the contributor added.
BTC/USD fell below the Trader Onchain Realized Price after trading above it since Aug. 19. The Price Bands include upper and lower trailing levels around the cost basis set at fixed profit and loss margins. The nearest lower band to the cost basis sits at a 12% aggregate loss, currently equal to $68,400. Price last fell through it at the start of June, subsequently deviating up to 12.6% below the band over the following month.
Bitcoin Trader Onchain Realized Price Bands. Source: CryptoQuant
Bitcoin short-term holders watch profits erode
Below $77,000, Bitcoin is also approaching the realized price of the broader speculative investor base known as short-term holders (STHs), another trend line that functions as support during uptrends, as well as resistance during downtrend reversals.
Related: BTC heads into US midterm showdown: Three things to know in Bitcoin this week
These entities have held their BTC without selling for up to 155 days and have a cost basis of $75,832 as of Tuesday. This corresponds to a reading of 1.012 on the cohort’s Market Value to Realized Value (MVRV) Ratio metric, which divides the market value of STH coins by their realized value, based on the prices at which they last moved onchain.
The metric shows that once price falls below the MVRV breakeven point corresponding to the STH realized price, the next key psychological support level is an MVRV reading of 0.85. This is described as an area of “tactical capitulation” or “short trap.”
The start of June also marked the last time that BTC/USD fell through the 0.85 MVRV level, subsequently recovering it in mid-August.
Bitcoin STH realized price and MVRV data. Source: CryptoQuant
