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Cryptocurrency News Articles
Bitcoin (BTC) Fights to Maintain Its $62.5K STH Cost Basis to Hedge Against Market Pressure
Oct 09, 2024 at 01:57 pm
After dropping into the $60K region at the beginning of October, Bitcoin bounced back to the $63K mark over the weekend, and eventually surpassed it on Monday.
Bitcoin price dropped into the $60K zone at the beginning of October before bouncing back to the $63K level over the weekend. On Monday, BTC price eventually moved past this level, as highlighted by Glassnode data.
This price point coincides with the Short-Term Holder (STH) cost basis, which serves as a crucial gauge for the market's short-term health. If Bitcoin fails to hold above this level at $62.5K, recent buyers may face significant pressure.
At press time, Bitcoin is trading at $62,380, a slight decrease from the STH cost basis, as the price attempts to reclaim and maintain this level.
With Bitcoin price hovering around the STH cost basis, the market appears to be at a crossroads. However, Glassnode points out that the 26% drawdown from the highs above $73K this year is noteworthy but not catastrophic.
According to the report, this decline is less severe than those observed by BTC in previous cycles.
Despite this, the past few months have seen some of the most bearish conditions since the FTX market implosion in Q4 2022, likely influenced by economic uncertainties and geopolitical tensions. Notably, Bitcoin has declined by 12% since April.
Bitcoin STHs largely contribute to the near-term price action, and currently, Short-Term Holders (STHs) are in a profitable position.
The ratio of STHs' supply in profit to their supply in loss currently stands at 1.2.
Furthermore, the STH-MVRV ratio, which measures the unrealized gains or losses of short-term holders, has also bounced back following a dip in August, indicating that newer entrants in the Bitcoin market are experiencing increasing profitability.
However, as gains accumulate, there is a growing incentive for STHs to lock in profits, potentially leading to selling pressure if BTC fails to maintain its current price levels.
Two More Price Points Indicate Bitcoin Market Health
In addition to the STH cost basis at $62.5K, Glassnode highlights two more price points that are crucial in assessing the market health: the True Market Mean at $47K and the Active Investor Price at $52.5K.
Throughout 2024, Bitcoin price has largely remained above these two levels, except for a brief dip below the Active Investor Price due to selling pressure in August.
Bitcoin's position above these support levels indicates that the market is still healthy and capable of handling retracements.
The report also notes a decline in speculative activity within the derivatives market. The weekly cost of leverage for long positions, which peaked at $120M during BTC's all-time high in March, has now dropped to a mere $15.3M.
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