Bitcoin (BTC) has sent shivers down the spines of investors after dipping below the crucial support level of $64,000 on June 21st. This drop not only breaches a key psychological barrier but also falls beneath the average price paid by short-term holders, raising concerns of a potential price correction.
Cryptocurrency analysis firm CryptoQuant warned in a recent post that Bitcoin’s fall below $65,800 “suggests a potential 8%-12% correction toward $60K.” This price point hasn’t been seen since May 3rd, according to CoinMarketCap data.
Adding fuel to the fire, Bitcoin’s decline on June 22nd pushed the price down to $63,442, slipping below the short-term holder realized price (STH-RP) of $64,230 as per LookIntoBitcoin data. STH-RP is a significant indicator for traders, representing the average price at which short-term Bitcoin(BTC) holders (those holding for less than 155 days) acquired their coins. Historically, this price point has acted as a strong support level, particularly during the bull runs witnessed since early 2023. However, Bitcoin’s recent struggles to stay above the STH-RP have sparked fears of a steeper decline.
“Bitcoin’s short-term holder realised price generally acts as support in upward trending markets,” commented Crypto Caesar, a well-known pseudonymous crypto trader, on June 19th. “Let’s see if it holds,” echoed Phillip Swift, founder of LookIntoBitcoin.
A potential slide to $60,000 could result in a significant liquidation of long positions, wiping out an estimated $1.64 billion according to CoinGlass data. This instability comes after a period of relative price stagnation for Bitcoin, hovering around the $65,000 mark for weeks. This has left traders wondering what the future holds, especially following two major events of 2024: the launch of spot Bitcoin ETFs in the US and the Bitcoin halving in April.
While the immediate future seems uncertain, some analysts remain optimistic. In a June 13th report, Cointelegraph noted that Bitcoin(BTC) has been experiencing its longest consolidation period ever, lasting 92 days. Some believe this extended period of stability could be a precursor to a “massive upside rally.”
Ki Young Ju, founder and CEO of CryptoQuant, an on-chain and market analytics firm, believes “Bitcoin network fundamentals could support a market cap three times its current size compared to the last cyclical top.” Young Ju, referring to a chart comparing Bitcoin price and hash rate to market capitalization ratio, suggests the network’s underlying strength could potentially “sustain” Bitcoin’s price at $265,000.
Only time will tell what direction Bitcoin(BTC) will take. However, the recent price drop below $64,000 and the breaching of the STH-RP have undoubtedly injected a dose of caution into the market.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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