$28.7k could be the next level to break for Bitcoin, here’s why
On-chain data suggests that the $28,700 mark, which Bitcoin has yet to hit since the LUNA collapse, could be the next major hurdle to clear for the asset.
Bitcoin has been below the $28,700 level for 310 days now
According to data from the analysis company at the chain Glass node, $28,700 is the cost basis (that is, the acquisition price) of a specific whale group in the BTC market. The relevant indicator here is the “realized price”, a value derived from the realized cap, a capitalization model for Bitcoin.
Instead of taking the value of each coin in the circulating BTC supply to be the same as the current asset price, the realized rate assumes that the “actual” value of any coin is the price at which it was last traded on-chain.
The realized price is obtained when this metric is divided by the total number of coins in circulation. As the realized cap represented the price at which the holders bought their coins, i.e. the cost base, it is the realized price that represents the cost base of the average investor in the market.
In the context of the current topic, the realized price has been applied to three whale cohorts to find their average acquisition prices. To better identify the price at which these whales first purchased their coins, Glassnode has used their exchange withdrawal transactions as the point at which they purchased Bitcoin (since exchanges are what holders typically use for purchasing purposes).
Now, here’s a chart showing the trend in the realized Bitcoin price for these groups of whales over the last couple of years:
The price seems to be approaching the highest of these levels | Source: Glassnode on Twitter
Whales have been placed into these three groups based on the period in which they acquired their coins. For example, the March 12, 2020 cohort includes all whales that acquired the coins between now and then.
As shown in the graph above, the July 5, 2017 whale group has the lowest cost base of $18,000, below which BTC got stuck during the lows after the FTX collapse. Some time later, the coin tried to put together a rise and get above this level, but it was rejected.
But with the rally this year, BTC was finally able to break through this level. The rally continued until on December 16, 2018, the cryptocurrency tested the whale cost basis of $23,800 and found resistance.
From the chart, it is clear that the asset struggled around this mark for a while until the sharp price rally in the last week took place and the asset managed to clear this level.
Now Bitcoin’s price is above the $28,000 mark and the coin is fast approaching the cost base of the final cohort, the whales on March 12, 2020. Given that the other two groups of whales offered resistance to the price, it is possible that the $28,700 cost base of the final cohort can also cause problems for the asset.
BTC price
At the time of writing, Bitcoin is trading around $28,000, up 9% in the past week.
Looks like BTC has mostly consolidated today | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
