Key Points
- Bitcoin’s short-term holders’ average cost basis indicates a potential local top for the cryptocurrency.
- Whale accumulation trends and other metrics suggest a continued downtrend for Bitcoin.
Bitcoin is projected to maintain a downward trend in the forthcoming weeks.
This is indicated by the average cost basis of short-term holders, which suggests a potential local peak for Bitcoin (BTC).
Bitcoin’s Volatile Movements
Over the past few days, Bitcoin experienced significant volatility. On August 21st, it peaked at $61.8k, only to drop to $59.7k a few hours later.
These fluctuations could be attributed to the liquidity pools that have accumulated around BTC recently.
The cumulative liq levels delta was significantly positive, indicating a short-term price pullback to flush out overeager bulls.
Short-term Holder Cost Basis as a Barrier
CryptoQuant analyst Burak Kesmeci suggested that the realized prices of short-term Bitcoin holders could be used to identify resistance zones.
These are individuals who have held BTC in their wallets for less than 155 days.
Kesmeci observed that the 1-3 month BTC holding group had an average cost basis of $64k, while the 3-6 month group had an average cost basis of $66k.
With market prices below this zone, most of these holders were likely incurring losses.
Therefore, a price increase into this area would likely prompt underwater holders to exit the market at near break-even, potentially increasing selling pressure.
Whale Accumulation/Distribution Trends
Wallets holding between 10k-1M BTC witnessed a sustained accumulation phase from early December 2023 to late January 2024.
During this time, the price of Bitcoin appreciated by 16%.
By March, BTC had increased by another 70%, but this was accompanied by the BTC whale cohort (those with more than 10k coins) distributing and taking profits during the rally.
This whale cohort has been in a distribution phase for the past six weeks, despite Bitcoin’s price performance not being strongly bullish.
This implies an anticipation of a price dip and continued downtrend.
The 1-month liquidation heatmap more clearly illustrates the range potential.
The substantial liquidity at $63k, $67k, and $70k is likely to attract prices in the coming weeks.
However, the liquidity built up at $54k and $49k are also significant magnetic zones.
Currently, the price action and whale accumulation trends do not favor a breakout past $66k.
