Bitcoin is facing significant selling pressure due to the Federal Reserve’s announcement of prolonging higher interest rates. This has led to substantial outflows from Bitcoin investment products, totaling $620 million last week, with Bitcoin ETFs experiencing heavy losses.
Analyzing BTC’s Movement Ahead:
Understanding the Realized Price:
Amid this turbulent environment, on-chain data reveals that Bitcoin is approaching the “Realized Price” of short-term holders, which historically holds significance for BTC. Julio Moreno, CryptoQuant’s Head of Research, explains that this metric tracks the average acquisition cost of Bitcoin by investors who purchased within the past 155 days.
The Realized Price indicator signifies the average acquisition cost of Bitcoin by investors. When Bitcoin’s spot price exceeds this metric, investors are in profit; if it falls below, they incur losses. Currently, Bitcoin’s spot price is close to the Realized Price for short-term holders, indicating that while these investors are still profitable, their margins are narrowing.
Historical Importance of Realized Price Retests:
Historically, retests of the short-term holder Realized Price have been crucial for Bitcoin. Moreno’s analysis shows that in the past two years, Bitcoin’s price has interacted with this level multiple times. Two instances (marked with green circles) saw Bitcoin finding support and rebounding, continuing its bullish momentum. However, in three other instances (marked with red circles), Bitcoin failed to hold this level and experienced declines ranging from 8% to 12%.
Market Sentiment and Potential Factors:
Henrik Andersson, Chief Investment Officer at Apollo Crypto, suggests that reduced interest in spot Bitcoin exchange-traded funds may contribute to the market downturn, although the exact reason remains unidentified. BTC remained relatively stable around $66,000 over the weekend, but a sharp sell-off on Monday brought it down to $64,000, with a slight rebound placing it near $66,000 currently.
The market’s response to this level could determine whether Bitcoin finds support and rebounds or faces further declines, potentially dropping to $60,000. Ongoing selling pressure influenced by macroeconomic factors such as Federal Reserve policies and investor sentiment towards Bitcoin ETFs continues to shape Bitcoin’s near-term outlook.
