Bitcoin Faces a Challenge with a Key Bull Market Trendline
Bitcoin’s bull market is facing a critical period as it attempts to reclaim a key trendline it lost in June 2023. Data from on-chain analytics platform CryptoQuant indicates that Bitcoin’s (BTC) price action is retesting the short-term holder (STH) realized price.
BTC Price Sends Short-Term Holders into the Black
Activity among short-term holders (STHs) is a significant indicator during bull markets, as the aggregate cost basis of these speculative participants often provides long-term price support. This has been the case since the latest bull market began in early 2023, where BTC/USD only briefly fell below the STH realized price. Recently, there has been a positive indication as STHs—defined as entities holding BTC for 155 days or less—are now operating at a profit.
According to CryptoQuant contributor J. A. Maartunn, “Recently, the Bitcoin price has reclaimed the STH Realized Price. This is a positive sign because short-term holders often add to their positions when Bitcoin returns to their average cost basis, creating a support level.”
Maartunn added that Bitcoin has reclaimed the short-term holder realized price twice since 2023, each time resulting in at least 30% profits. However, the STH realized price slightly varies according to different sources. For instance, Glassnode’s weekly newsletter "The Week Onchain," published on July 16, noted, “Across the last 30-days, the Short-Term Holder (STH) cohort experienced a dramatic decline in profitability, with more than -66% of their supply moving into an unrealized loss."
Glassnode estimated the STH realized price at $64,300 at the time.
Bitcoin Trader Warns Over Low Volumes
As Bitcoin strives to reclaim its STH realized price, another critical area around $65,000 remains a focus for the bulls. Converting this level into support is a key milestone for upward momentum.
Prominent trader and former fund manager Aksel Kibar shared his outlook, noting, “This is the 5th month $BTCUSD is not backing off from the strong resistance around 65K. I see this as very bullish long-term. Sticking to a resistance and no intention of selling off is usually a sign of a pending breakout.”
However, on daily timeframes, popular crypto trader JT cautioned that BTC/USD needs to surpass several Fibonacci retracement levels to reach new all-time highs. JT also pointed out the concerning volume trend, commenting, "Volume was extreme into this pump off of the $53K low. It has now dropped precipitously. We are now below average volume profiles."
Given these conflicting views, it’s essential to approach Bitcoin investments cautiously. Like all investments, Bitcoin trading involves risk, and individuals should conduct thorough research before making any trading decisions.
FAQ
1. What is the STH realized price?
The STH (short-term holder) realized price is the average price at which current short-term Bitcoin holders acquired their coins, typically holding them for 155 days or less.
2. Why is the STH realized price significant?
The STH realized price is significant as it often provides a support level during bull markets. When Bitcoin reclaims this price, it indicates that short-term holders are operating at a profit, encouraging them to add to their positions and providing market stability.
3. What is causing the concern over low trading volumes?
Low trading volumes, as noted by trader JT, can indicate less buying demand, which may hinder Bitcoin’s price from breaking through key resistance levels. High volumes are generally required to sustain significant price movements.
In conclusion, Bitcoin’s efforts to reclaim key price levels and the support of short-term holders signal a potentially positive outlook. However, concerns around trading volumes and the need to breach significant resistance levels suggest that caution is warranted.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making decisions. For additional reading on cryptocurrency trends and investment strategies, visit Cointelegraph and Glassnode.