Bitcoin’s Price Decline Continues Below $63,000
The price of Bitcoin has continued its decline in the past day, slipping below $63,000. Analyst Ali has analyzed on-chain data from Glassnode to determine potential support levels for the cryptocurrency.
On-Chain Data Analysis
Analyst Ali has examined the support and resistance levels for Bitcoin based on on-chain data from Glassnode. The key indicator used is the “UTXO Realized Price Distribution” (URPD), which provides information about the coins (or UTXOs) that were last purchased at different price levels throughout Bitcoin’s history.
The analyst has shared a chart that shows the distribution of URPD for price levels around the current spot value of Bitcoin. This chart reveals that FOMO buying has occurred at the asset’s all-time high levels.
Relevance of Acquisition Centers
In on-chain analysis, acquisition centers are considered relevant for support and resistance because investors tend to react when a retest of their cost basis occurs.
If a retest is from above, holders may choose to accumulate more Bitcoin, believing that the price will rise again in the future. Conversely, if the retest is from below, they may decide to sell instead, as they perceive breaking even as a better option than risking further price drops.
A large number of coins with their cost basis at the same level indicates a potentially significant reaction from investors and can result in strong support or resistance effects on the price.
Potential Support Levels
Based on the URPD data analysis, here are some potential support levels for Bitcoin:
- $62,700: Bitcoin is approaching its first major on-chain support level, currently trading around this price.
- Previous resistance levels: The URPD chart shows that FOMO buying occurred at Bitcoin’s all-time high levels. These levels could potentially act as support if the price retraces to those levels.
- Cost basis accumulation points: If Bitcoin regains its upward momentum, the levels with a high population of coins at certain cost bases could present some resistance. Investors may react to retests of these levels by accumulating more or selling their holdings.
Bitcoin’s Current Price
The price of Bitcoin has dropped below $63,000 and is currently hovering around $62,700. It is approaching its first major on-chain support level.
[Bitcoin Price Chart Image]Hot Take: Bitcoin Faces Potential Support Challenges
As Bitcoin’s price continues to decline, it faces potential support challenges. Based on on-chain data analysis, there are several key points to consider:
- The UTXO Realized Price Distribution (URPD) provides insights into the distribution of coins purchased at different price levels in Bitcoin’s history.
- FOMO buying has been observed at Bitcoin’s all-time high levels, indicating potential support if the price retraces to those levels.
- Acquisition centers, where a large number of coins have their cost basis at the same level, can act as strong support or resistance points based on investor reactions.
- Bitcoin is approaching its first major on-chain support level at $62,700.
It remains to be seen whether Bitcoin will find support at these levels or continue its decline. Investors should closely monitor the market and consider these potential support and resistance areas when making investment decisions.
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