Author: Omkar Godbole, Coindes; Translated by: Deng Tong, Jinse Finance
Short-term holders’ wallets are seeing losses and may be liquidated close to the $65,000 breakeven level.
Long-term holder wallets with an average cost of less than $20,000 are incentivized to hold or increase their cryptocurrency reserves.
As Bitcoin (BTC) looks to recover from its July losses, new challenges loom, with on-chain data pointing to potential resistance at $65,000.
As of writing, BTC by market capitalization is trading up nearly 1% at $63,200, looking to regain some stability after a 7% drop at the end of June. June’s drop reversed a rally in May that was driven primarily by miner selling and concerns that ETF inflows represented non-directional arbitrage bets rather than outright bullish bets.
Notably, the price drop has taken the price well below the widely tracked cost basis of short-term Bitcoin holders, or wallets that have stored for 155 days or less. According to data from data source LookIntoBitcoin, the total cost basis for short-term holders is $65,000 as of this writing. The on-chain analytics firm considers realized price as the total cost basis, reflecting the average price at which a cryptocurrency was last spent on-chain.
In other words, short-term holders are now facing losses or holding losing positions and may try to exit the market at a loss or breakeven, which may increase selling pressure near $65,000.
“Bitcoin’s price is trading below short-term holders’ total cost basis for the first time since August 2023. In the near term, we expect some resistance around $65,000 as short-term market speculators may look to exit their positions at ‘breakeven’ levels,” Blockware Intelligence analysts said in the latest edition of their newsletter.
“Last summer, when BTC lost STH RP (realized price) support, the price traded sideways for another two months before finally breaking out again,” the analysis added.
Bitcoin short-term holders realize price or average cost basis. (LookIntoBitcoin)
Meanwhile, long-term wallet holders have a strong incentive to maintain or increase their cryptocurrency stash because their average cost is below $20,000, according to LookIntoBitcoin. Yes, you read that right, their average cost is nearly 70% lower than the prevailing market price of BTC.
Additionally, the 15% pullback in Bitcoin’s price from its all-time high of over $73,500 in March may seem large to traditional market investors, but it is a normal bull market correction for long-term cryptocurrency holders.
“BTC has dropped 20% or more 10 times during the 2017 cycle. These are normal, healthy bull market corrections. Bitcoin’s price volatility shakes out weak hands and provides opportunities for strategic capital deployment for those with a longer time horizon,” Blockware said.
