Bitcoin Analyst Reveals Best On-Chain Metric For ‘Day-To-Day Trading’
17 October 2024 - 1:00AM
NEWSBTC
An analyst has explained how this Bitcoin on-chain indicator has
been one of the best in terms of short-term trading during the past
month. Bitcoin Short-Term Holder Realized Price Has Proven To Be
Reliable Recently In a new post on X, CryptoQuant Community Manager
Maartunn has discussed about an indicator that’s suited for doing
day-to-day BTC trading. The metric in question is the Realized
Price of the short-term holders. The “Realized Price” here refers
to an indicator that, in short, keeps track of the cost basis of
the average investor or address on the Bitcoin network. When the
spot price of the coin is greater than this metric, the holders as
a whole are in a state of net profit. On the other hand, it being
under the indicator suggests the dominance of loss in the market.
Related Reading: Ethereum Could Push To $6,000 If This Pattern
Holds, Analyst Says In the context of the current topic, the
Realized Price of only a particular segment of the sector is of
interest: the short-term holders (STHs). The STHs are made up of
the investors who purchased their coins within the past 155 days.
This cohort corresponds to one of the two main divisions of the
Bitcoin market done on the basis of holding time, with the other
group being known as the long-term holders (LTHs). Now, here is the
chart shared by the analyst that shows the trend in the Bitcoin STH
Realized Price over the past month: In the above graph, Maartunn
has highlighted all the instances where the Bitcoin price made a
retest of the STH Realized Price during this window. It would
appear that the line has acted as both support and resistance for
the asset. The cryptocurrency finding a break above the line has
turned it into support, while it falling under has led to the level
changing into resistance. This is actually a pattern that the STH
Realized Price has displayed throughout history, not just the past
month. As for why the indicator shows such interactions with the
coin’s price, the answer may lie in investor psychology. The STHs
tend to include the most fickle-minded investors in the market and
they are particularly sensitive to retests of their cost basis.
When Bitcoin retests their Realized Price from above, they may
decide to buy more of the asset, as they could believe that the
same level would prove to be profitable again in the future. This
accumulation provides support to the BTC price. Related Reading:
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Similarly, the STHs can sell as a reaction to a retest from below,
as they may fear that they would go into losses once more in the
near term, so exiting at the break-even would at least give them
their money back. While the Bitcoin STH Realized Price does tend to
carry some reliability, it can also show some deviations. As the
analyst has marked in the chart, one such outlier instance occurred
just earlier in the month. BTC Price At the time of writing,
Bitcoin is floating around $65,700, up more than 5% over the last
seven days. Featured image from Dall-E, CryptoQuant.com, chart from
TradingView.com
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