Bitcoin Faces Pressure Below Key Support Level: $88,000 Next?

Bitcoin is currently experiencing challenges in reclaiming the short-term holder Realized Price, an important on-chain indicator. This article explores where the next significant support level for the cryptocurrency may lie.

In its most recent weekly report, on-chain analytics firm Glassnode examined crucial Realized Price levels for Bitcoin. The term "Realized Price" refers to a metric that assesses the cost basis of the average investor or wallet within the BTC network.

When this metric is above Bitcoin's current price, it indicates that holders, as a collective, are enjoying a net unrealized profit. Conversely, when it falls below the market price, it signals that the blockchain is largely dominated by losses.

It's important to note that the overall Realized Price of the network can often be misleading, as Bitcoin's market price usually trades well above this level. This discrepancy is largely due to a significant portion of Bitcoin's supply being dormant for extended periods, with a cost basis that is dramatically lower than the existing market prices.

Moreover, a significant chunk of this dormant supply may never re-enter circulation, as the wallets holding these tokens have lost their keys permanently. To address this issue, Glassnode introduced the "Active Realized Price," which focuses solely on the cost basis of Bitcoin that is economically active.

Below is a chart provided by the analytics firm, illustrating the changes in both the Realized Price and Active Realized Price of Bitcoin since the last bull market:

The chart clearly shows that Bitcoin last engaged with the Realized Price in 2023. Following a rebound at that time, the cryptocurrency has since moved away from this critical level.

Bitcoin has been trading relatively close to its Active Realized Price since surpassing it in late 2023, yet there remains a noticeable gap even in this instance. A more relevant indicator that Bitcoin frequently interacts with is the short-term holder cost basis, depicted in the chart.

Short-term holders (STHs) are defined as Bitcoin investors who acquired their coins within the previous 155 days. This group represents recent buyers who tend to be responsive to market fluctuations.

The Realized Price for this group, often viewed as a threshold between bullish and bearish market trends, currently stands at $113,100. Bitcoin initially fell below this level during its recent crash earlier in the month, but a subsequent recovery allowed it to rise above this line. However, the latest retracement has once again pulled the asset back under this crucial price point.

According to Glassnode, "Over the past two weeks, Bitcoin has struggled to close a weekly candle above this key level, raising the risk of further weakness ahead." The next potential on-chain support level is the Active Realized Price, which is currently valued at $88,000.

The question now remains whether Bitcoin can bounce back above the STH Realized Price or if a more substantial correction is on the horizon.

Bitcoin has recently experienced a decline of nearly 3% during the past week, which adds to the ongoing concerns regarding its market position.