This is where the next major resistance to Bitcoin erasure could lie from an on-chain analytics perspective.
Bitcoin resistances according to on-chain data
Bitcoin recently saw a surge past the $27,000 mark, and many are wondering how long this new rally could last for the cryptocurrency. Perhaps one way to determine this could be to look at where the main resistance levels are.
In terms of on-chain analysis, “resistance” is usually in areas where many investors have their cost base present due to the way holder psychology tends to work.
“Cost basis” here refers to the average price at which an investor purchases coins. When the spot price is less than the holder’s cost basis, it is a net loss.
Once BTC returns to the investor’s acquisition price, the investor may want to sell, because at least this way they would have avoided exiting at a loss. For this reason, whenever a large number of investors have their cost base present in a particular price range, it could provide resistance to the asset due to the amount of selling pressure that can result. .
Now here’s what the different Bitcoin price ranges look like in terms of investor cost base concentration, according to data from the market information platform. In the block:
The different support and resistance levels according to on-chain data | Source: IntoTheBlock on X
As noted above, the next particularly thick base cost range is from $25,853 to $29,662. “A key resistance is expected around $29.2k – an acquisition point for over 1.77 million addresses,” explains IntoTheBlock.
The $27,200 to $28,000 range (the range just past the cryptocurrency’s current spot price) isn’t super thin either, but it has significantly fewer investors than the other. The next range from $28,000 to $28,853 doesn’t have many investors, so if BTC can break through the upcoming range, the rise to near $29,000 could be clear.
While the investor cost basis can act as resistance when retested from below, they can also provide support when retested from above. The reason behind this could be that an investor who had already made profits might have reason to believe that the asset would rise again, so they might buy more at its cost, thinking that it is a point of return. profitable entry.
From the image, it is evident that the two ranges just below the current price are very address rich, as Bitcoin had previously consolidated at these price levels for a significant period of time.
It is perhaps due to these strong support levels that when the asset returned to $26,600 yesterday, it quickly rebounded to the current price level.
BTC Price
At the time of writing, Bitcoin is floating around the $27,200 level, up 4% over the past seven days.
BTC has observed a sharp rebound during the past day | Source: BTCUSD on TradingView
Featured image by Maxim Hopman on Unsplash.com, chart by TradingView.com
