Bitcoin has experienced another retracement in the past day, bringing its price down to the short-term holder cost basis, which has so far proven to be a support level.
Bitcoin Is Undergoing Another Retest of the STH Realized Price
According to CryptoQuant community analyst Maartunn in a recent post on X, Bitcoin may currently be at the fourth phase of the short-term holder (STH) Realized Price cycle.
The “Realized Price” here is an indicator that assesses the average cost basis of investors on the BTC network. When this metric’s value exceeds the spot price, it indicates that the overall market is experiencing a net unrealized loss. Conversely, if it falls below BTC’s value, the average holder is in profit.
In this context, the Realized Price of a particular segment of investors is noteworthy: the STHs. These are BTC holders who acquired their coins within the last 155 days. This group is often seen as the more reactive segment of the community, likely to make hasty decisions during periods of volatility.
Here is the chart shared by Maartunn, illustrating the trend in the Bitcoin Realized Price of STHs over the past few months:
The chart indicates that Bitcoin has made several retests of the STH Realized Price in recent weeks, with the level holding strong thus far. The reason for this support is rooted in investor psychology.
As the analyst detailed in the chart, STHs typically undergo a five-step cycle during bullish trends. The first three steps involve some degree of buying from this group upon retests of their cost basis from above. These investors view retraces to their break-even point as opportunities to buy the dip.
However, by the fourth retest, they may become fatigued and consider halting their accumulation. This is when the support level may stop being effective for the cryptocurrency.
From the chart, it is evident that the latest retracement in Bitcoin has again brought its value close to the STH Realized Price. Given that this is the fourth retest, Maartunn has pointed out that this could signify the fourth phase in the STH cycle.
It will be intriguing to observe how the asset’s price behaves in the upcoming days. A sustained move below this level could confirm a breakdown of support and lead to the fifth and final step of the STH cycle, where investors may view their break-even level as a chance to exit the market, transforming previous support into resistance.
BTC Price
Bitcoin fell to $110,000 earlier today but has since recovered to $113,000.
