Bitcoin’s Potential Rebound May Face Resistance at $65K, OnChain Analysis Shows

The leading cryptocurrency by market value traded nearly 1% higher at $63,200 as of writing, looking to regain some poise after ending June with a 7% loss. June’s drop, which reversed May’s upswing, mainly occurred due to miner selling and concerns that ETF inflows represent non-directional arbitrage bets instead of outright bullish bets.

Significantly, the recent drop in price has caused it to fall significantly below the commonly monitored average purchase price for short-term bitcoin holders, or those who have held their coins for less than 155 days. According to data from LookIntoBitcoin, this average purchase price currently stands at $65,000. Realized price, as calculated by on-chain analytics firms, represents the average price at which these coins were last transacted on the blockchain.

As an analyst, I would interpret it this way: With current market conditions, those who have recently invested in Bitcoin and are looking to make short-term gains may be experiencing losses or holding positions below their initial investment price. Faced with these circumstances, they might choose to sell at a loss or break even, thereby increasing the selling pressure around the $65,000 mark.

Analysts at Blockware Intelligence noted that the cost basis of short-term bitcoin holders, which represents the total amount they paid for their coins, is now higher than the current market price for the first time since August 2023. This situation might lead to some resistance around $65,000 in the near term as speculators may choose to sell their positions at a level close to their initial investment (breakeven point).

I analyzed the Bitcoin market last summer and noticed that after losing the significant support level at its realized price (STH RP), the price moved sideways for approximately two months before eventually breaking out anew.

Currently, investors who have held Bitcoin for a long time are motivated to keep or increase their Bitcoin holdings. The average price they paid for their coins is below $20,000 according to LookIntoBitcoin. That’s around 70% lower than the current market value of Bitcoin.

As a researcher studying the cryptocurrency market, I’d like to point out that although bitcoin experienced a 15% decrease from its all-time high of over $73,500 in March, this price correction is a typical occurrence during a bull market for dedicated crypto holders.

As a crypto investor looking back at the 2017 bull run, I recall that Bitcoin experienced ten significant price drops of over 20%. However, it’s essential to understand that these corrections are a normal part of a healthy bull market. The volatility in Bitcoin’s price serves to weed out less committed investors and presents opportunities for strategic capital deployment for those with a longer investment horizon. In essence, these market fluctuations create an environment where patience and a well-thought-out strategy can lead to potential gains.