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On-chain data shows the Bitcoin spot price is currently sandwiched between two zones where a large number of investors last bought their coins.
Bitcoin Is Trading Between Two Major On-Chain Demand Zones
In a new post on X, analyst Ali Martinez has talked about where the key Bitcoin on-chain support and resistance levels currently lie. In on-chain analysis, support and resistance levels are defined based on investor cost basis.
The reason behind this is naturally the fact that holders are particularly sensitive to retests of their break-even mark. How exactly an investor would react to a retest of their cost basis comes down to multiple factors, like the direction of the retest and the overall sentiment in the market.
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In general, holders might be inclined to accumulate more when a retest of their acquisition level happens from above (that is, they were in profit prior to the retest). They may do so believing that the same level would prove profitable again in the future.
On the other hand, the addresses who were sitting underwater just prior to the retest might decide to exit, fearing that the cryptocurrency would decline once more.
Obviously, when only a few investors are showing these buying/selling reactions, Bitcoin doesn’t feel any visible fluctuations. When the asset is retesting a narrow range with the cost basis of a large number of them, however, the story can be different.
Now, here is the chart shared by the analyst that shows how the ranges around the current BTC spot price look in terms of holder cost basis distribution:
As is visible in the above graph, Bitcoin has managed to break above a major supply wall with its recent recovery surge. This cost basis center, lying inside the $93,700 to $96,600 range, contains the acquisition mark of 2.13 million addresses. These investors bought a total of 1.39 million BTC here.
The asset is now looking to challenge the $96,900 to $98,700 range, which carries the cost basis of 750,800 BTC. Since these investors are holding at a loss, it’s possible that the coin would have trouble breaking through this zone.
The fact that the more massive $93,700 to $96,600 range has now turned green, however, could be an optimistic sign. This potential strong support could mean that even if Bitcoin finds it hard to find a break above, it would at least have a cushion to drop back on after every rejection.
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In the scenario that this support gives out, though, the asset doesn’t have any other major zone until $82,000 to $85,000. It now remains to be seen whether demand would be strong enough to keep the BTC price recovery run going or not.
BTC Price
At the time of writing, Bitcoin is floating around $96,800, up over 2% in the last seven days.
Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com
