Bitcoin Faces Downturn: On-Chain Insights Hint at $104K

Bitcoin's value took a notable downturn on Monday, falling nearly 4%. This decline raises concerns about a potential test of the critical $104,000 support level, according to an in-depth on-chain analysis.

On Tuesday, the renowned on-chain data platform Glassnode shared their analysis via a post on X, highlighting a sustained lack of upward momentum in Bitcoin's price. They remarked, "Since July, BTC has consistently failed to reclaim the cost basis of the top buyers' supply," indicating a troubling trend for the cryptocurrency.

This insightful analysis employs the "Top Buyers Cost Basis Distribution" metric, which compares Bitcoin's current price to the average acquisition prices of various market segments, particularly the latest and highest-priced buyers.

The metric delineates several significant cost basis quantiles:

These quantile levels serve as critical support and resistance points. When Bitcoin's price dips below a quantile line, buyers in that group experience unrealized losses, which can lead to increased sell pressure and potential capitulation.

Glassnode's analysis indicates that the recent price movements reflect a gradual decline in upward momentum since July. Bitcoin reached a new all-time high on August 14. During the subsequent correction, the market managed to maintain the green line (0.89 Quantile) as a support level for almost two months.

However, after the rally that led to another all-time high in early October, the market experienced a deeper correction that broke through the green line. This line, now approximately at $111,000, has switched from being a support level to one of resistance. This transition was confirmed when Bitcoin could not sustain the level after a minor rise to $110,800 on Monday at 00:00 UTC.

This structural deterioration indicates a bearish outlook. Glassnode cautioned, "This increases the odds of a retest of the 0.8-quantile cost basis (~$104K) as top buyers capitulate, transferring coins to stronger hands." Such a shift could signify a notable change in market dynamics.

At around 09:30 UTC, Bitcoin briefly dipped below the $104,000 mark only to recover shortly after, suggesting yet another test of this pivotal support level.

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