After starting the week with a sharp decline at around $78,000, the Bitcoin price appears to have stabilized. Approximately $73,500. However, a recent on-chain assessment suggests that if conditions are not met, the newfound stability may just be the typical calm before the storm.
Bitcoin’s main support level is around $72,400.
Crypto analyst Darkfost recently highlighted important developments in Bitcoin’s on-chain dynamics and their implications for fundamentals via social media platform X in a post on May 29. The relevant indicator here is the “realized price excluding >7 years supply” indicator.
For context, this indicator tracks the average acquisition cost of all Bitcoins moved over the past seven years, excluding long-dormant coins, to reflect the cost basis of active market participants.
Bitcoin trading above this level often means that Bitcoin’s most active holders are doing so while enjoying profits. This reduces the chance of random panic selling.
On the other hand, if the Bitcoin price remains below this key level for an extended period of time, it historically indicates that active holders are likely to face pressure as they are enduring unrealized losses. In general, this scenario could be dangerous for the Bitcoin price. This is because investors are increasingly inclined to sell stocks to reduce losses or break even.
Source: @Darkfost_Coc on X
According to Darkfost, the realized price for active Bitcoin holders is approximately $72,400. Interestingly, Bitcoin price recently fell below this support level before reversing and starting to consolidate near $73,500.
In Darkfost’s view, the aforementioned decline below the realized price is in fact a typical bear market pattern. However, the cryptocurrency expert explained that such a break below key support levels must be confirmed before news of a downtrend can be considered fact.
Therefore, the short- and medium-term future of the flagship cryptocurrency depends on how it performs in the short term. If Bitcoin can build bullish momentum through its current consolidation, the price will immediately remain firmly above investors’ average cost basis.
Conversely, if the Bitcoin price closes firmly below $72,400, the flagship cryptocurrency could quickly enter a bearish phase, triggered by the massive selling that would follow. This means that market participants should observe BTC’s price action at this key level before making any financial decisions.
Bitcoin price at a glance
As of this writing, the BTC price is around $73,540, down 0.4% over the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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