Analysts have issued a warning that support levels weaken the more they are retested, and Bitcoin is currently undergoing its third consecutive retest of a significant support level.
Bitcoin is once again retesting the short-term holder realized price. According to CryptoQuant community manager Maartunn in a recent post on X, BTC’s recent decline has resulted in another retest of the short-term holder realized price. This indicator tracks the average cost basis of investors or addresses on the Bitcoin network. When the realized price is higher than the current market price, it suggests that the average investor holds an unrealized profit. Conversely, when the indicator is below the asset’s current value, it implies that losses dominate the blockchain.
In this context, the focus is not on the realized price of the entire Bitcoin userbase but specifically on short-term holders (STHs), which include investors who purchased their coins within the past 155 days. A recent chart shows the trend in the Bitcoin realized price for STHs over the past few months, with the current spot price of Bitcoin retesting this metric.
As shown in the graph, Bitcoin’s spot price slipped below the STH realized price in June but managed to climb above it midway through last month. Since then, the asset has experienced a couple of pullbacks to this level but rebounded each time. Following the latest decline, Bitcoin’s price is once again retesting this crucial level.
Historically, the STH realized price has served as a reliable support point for Bitcoin during bullish periods. This pattern can be attributed to investor psychology. STHs, who tend to be more reactive to market changes, may view retests of their cost basis as dipping opportunities in bullish conditions, prompting them to accumulate more Bitcoin. This behavior has previously led to rebounds at this level.
However, with this current retest being the third in a short period, Maartunn notes that each retest weakens the support level. It remains to be seen whether Bitcoin STHs maintain a bullish outlook or if persistent pullbacks have incited fear.
In the past 24 hours, Bitcoin continued its recent bearish trend, with its price sliding another 2% to reach $64,700. The coin’s price has been declining in recent days, raising questions about the sustainability of its support levels.
