Bitcoin On-Track for Record Highs Despite On-Chain Resistance Level

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In the complex world of cryptocurrency, Bitcoin remains a fascinating subject of discussion and study. An insightful analysis recently elucidated how Bitcoin might reach unprecedented all-time highs, if it successfully breaks through a significant on-chain resistance level.

Diving deep into the on-chain analytics, Ali, a reputable analyst, shed light on the nature of Bitcoin’s current on-chain resistance, a critical factor swaying the dynamics of the cryptocurrency market. On-chain dynamics are fundamentally influenced by the strength of the support and resistance levels, corroborated by the last cumulative amount of Bitcoin procured at each threshold.

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Taking cues from Glassnode’s graphical representation of the UTXO Realized Price Distribution (URPD), which elaborately portrays the Bitcoin distribution along different price thresholds, depending on where investors secured their coins, Ali highlighted the intriguing contours of Bitcoin’s cost distribution.

Conspicuously, potential roadblocks lie ahead for Bitcoin at the spot price of $66,250. This threshold is particularly crucial as it represents the cost basis for more than 2% of all Bitcoin UTXOs. The ‘cost basis’ is essentially an investor’s initial investment amount, which naturally evokes reactions during retests as it teeters between profit and loss.

Retesting can elicit different reactions depending on the pervasiveness of investors who bought Bitcoin at similar thresholds. If the cost basis is shared by a significant number of holders at a certain level, the retest could dramatically affect the cryptocurrency’s value.

For investors struggling in the red and looking for a breakeven point of exit, a retest might serve as a lucrative opportunity to recoup their initial investment, especially if they anticipate a future fall in the asset’s value. As a logical consequence, such retests can trigger a selling frenzy, transforming the retest levels into formidable resistance points for Bitcoin.

In this context, the $66,250 level, the threshold at which a significant number of coins were purchased, might pose the steepest hurdle for Bitcoin. However, every cloud has a silver lining. The levels beyond this threshold seem relatively thin, making them easier to breach. As Ali puts it, “…once BTC breaks past this level, it will be positioned for new all-time highs!”

Substantiating Ali’s predictions, the market intelligence platform, IntoTheBlock, also acknowledged on-chain cost basis distribution in a recent post. The platform revealed that nearly 10% of all the addresses, roughly equivalent to 5.16 million, bought their coins within the price range of the current spot price and the all-time high set back in March.

At a glance, this implies that about 10% of the total addresses are flaunting red on the Bitcoin network, a figure worth watching. Meanwhile, Bitcoin continues to fluctuate within its recent range, presently trading around the $62,800 mark.

In the volatile universe of cryptocurrency, Bitcoin’s journey remains dynamic. Whether it will break past its on-chain resistance and soar to new heights remains to be seen. As always, every turn in the road brings with it new lessons and insights to absorb — the quintessential essence of investing in cryptocurrencies.