Data shows that Bitcoin is losing much of its on-chain support with its latest plunge. This is the range where the next zone for the item lies.
Bitcoin has fallen below the support region of $41,200 to $42,400
As explained by analyst Ali in a after At X today, BTC moved below a major support zone in the chain. An “on-chain support” range refers to a price lower than the current spot price of the cryptocurrency that hosts many investors’ cost base.
For any holder, the cost basis, the price at which he bought his coins, is a fundamental level, because a retest of it by the cryptocurrency can change his profit-loss balance.
Investor psychology works such that if this retest of the cost basis happens from above (meaning the holder had booked a profit prior to this), the holder might respond by buying more of the asset because he or she might think that the same price range could unpack. be profitable again in the future.
On the other hand, any investor who had previously suffered a loss should probably sell when the price reaches the breakeven point because he does not want to miss the opportunity to escape without a loss when the asset comes along. dropping again soon.
The responses of individual investors are generally not relevant to the market as a whole. But if many holders exhibit this reaction at the same time, the combined force can cause fluctuations in the price.
Here’s a chart showing what the different price ranges for Bitcoin look like in terms of the number of addresses that made a purchase:
Looks like the range around $38,000 is heavy with investors at present | Source: @ali_charts on X
As shown in the chart above, Bitcoin’s range between $41,200 and $42,400 is quite wide among investors. A total of 1.87 million addresses purchased 727,520 BTC at these levels.
Bitcoin has been moving in and out of this crucial support region over the past day, suggesting the zone may weaken. If the range is lost, BTC could see an extended decline into the next major support zone.
The chart shows that in the $37,400 to $38,700 range, substantial on-chain support could be available as 1.28 million addresses have their cost base.
So Bitcoin may be at risk of falling to $38,000 (the average price of the range) soon. In the potential scenario of such a pullback, the current range of $41,200 to $42,400 could also provide resistance as these addresses would become loss holders desperate to exit.
BTC price
Bitcoin fell towards the $40,500 level over the past day, but has since recovered to the $41,600 mark. It appears that support is not completely lost.
The price of the coin seems to have gone through a rollercoaster today | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, charts from TradingView.com, IntoTheBlock.com
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