On-chain data suggests that Bitcoin’s next major support level could be $30,200 if the level highlighted by this analyst is lost.
Bitcoin currently has support levels of $36,400 and $34,300
In a new job on X, analyst Ali explained what BTC’s different support levels currently look like from an on-chain perspective. A level can be defined as support based on the amount of Bitcoin investors purchased at that level.
Typically, any time the price drops to an investor’s cost basis, the investor may become more likely to show some sort of movement. Since the holder was last in a profit position, he might tend to believe that the asset would rise again in the future, if the prevailing trend is bullish in the market.
So, the investor might decide to buy closer to their cost basis, thinking that this would prove to be a profitable “dip” purchase. Naturally, a few traders displaying this behavior will not have any real effect on the price of the cryptocurrency. But if a large number of investors had bought at roughly the same price level, retesting assets at that level could produce a noticeable reaction in the market.
The purchases that could emerge could provide support for the cryptocurrency. Now, to visualize these support levels, the analyst cited the “UTXO Price realized Distribution” (URPD) metric from Glassnode, which tells us how much supply was last acquired at each of the price levels the asset has visited during its history.
Looks like the current price levels are thick with coins | Source: @ali_charts on X
As the chart above shows, prices around $36,400 provide the cost basis for a notable amount of supply. The asset fell below this mark over the past day, implying that the cryptocurrency could start to lose this major support zone.
If the asset fails to recover this level, the next major support level would be present at $34,300. A decline towards this mark would suggest losses of more than 5% for the asset.
This support level is, however, weaker than the one the asset is currently retesting, meaning it is possible that the level cannot prevent the asset from falling even further.
If this scenario plays out, Bitcoin would then enjoy downside support of approximately 16% from the current spot price of $30,200. The chart shows that any price levels below this support zone up to $25,000 represent the cost basis for a significant number of investors, meaning these levels should provide a potentially impenetrable wall for the active.
Thus, a decline to $30,200 is possible in the short term if the $34,300 level gets lost, but Bitcoin is unlikely to fall further than that.
Bitcoin had been hang on to $37,000 recently, but it appears that the asset has finally fallen, as it is now trading below the $36,300 mark.
BTC has registered some decline during the past day | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com