What to know:
- Bitcoin encounters resistance at approximately $113,600 as buyers strive to regain a bullish trend.
- Short-term traders might liquidate their positions at that point, which could impede a continuous price increase.
As bitcoin enthusiasts attempt to regain an upward price movement, they might encounter selling pressure around the $113,600 mark, based on on-chain data.
BTC has already rebounded to $112,800 after dropping to below $108,800 on Tuesday, according to CoinDesk data. This recovery is likely driven by a new all-time high in the S&P 500 and a stronger-than-expected earnings report from Nvidia, one of the largest publicly traded companies globally and a key indicator for the artificial intelligence sector.
The road ahead could be difficult, as investors who are currently at a loss may decide to sell during any price recovery.
“Currently, bitcoin trades beneath the cost basis of both the 1-month ($115.6k) and 3-month ($113.6k) cohorts, leaving these investors under stress. Any relief rally is therefore likely to encounter resistance, as short-term holders seek to exit at breakeven,” analytics company Glassnode stated in a report released on Wednesday.
Glassnode’s cost basis metric shows the average purchase prices for digital assets obtained by wallets based on different holding durations. For instance, the three-month cost basis of $113,600 indicates that investors who acquired assets within the last three months paid an average of this price level.
Mixed flows
Currently, the dynamics in the spot market indicate a challenging situation for bullish traders, although ETF and corporate actions show a different trend.
“Spot demand remains neutral, as perpetuals tilt bearish with CVD negative. The current funding rate of ~0.01% points to a fragile neutrality. If price breaks above $112.4K with volume, it opens the pathway to $114K – $116K,” stated Timothy Misir, head of research at BRN.
However, the ongoing ETF inflows along with corporate engagement with BTC are significantly reducing market supply, providing some bullish optimism, explained Misir.
“ETF flows continue to strengthen with $81 million for Bitcoin ETFs and $307 million for Ether ETFs over the past day. ETFs, corporates, and governments are now absorbing ~3,600 BTC/day, which translates to ~4x miner issuance. Metaplanet announced a new plan to raise $881 million to buy $837 million BTC in Sep–Oct, adding to its 18,991 BTC,” he added.
Gauging key support
If Bitcoin (BTC) begins to decline, the crucial support point to monitor is $107,000.
This is significant because Glassnode’s analysis indicates that the six-month cost basis aligns with that figure. Therefore, if it breaks below that threshold, it may lead to these holders selling off, potentially resulting in a sharper drop.
According to Glassnode, “The 6-month cost basis sits near ~$107k. A sustained move below this level risks triggering fear, which could accelerate downside momentum.”
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