Bitcoin‘s recent surge in price has led to a rise in short-term holders’ (STHs) profitability, which is now affecting support and resistance levels. Glassnode, an analytics firm, has released its latest report indicating that STHs may be dictating BTC price resistance.
The Market Value to Realized Value (MVRV) metric was used to capture the profitability of STHs who hold coins for 155 days or less. This metric compares the Bitcoin market cap to the value of coins moved on-chain. The MVRV passed 1.2 as the price of BTC/USD climbed towards $25,000, indicating that the price was above ‘fair value.’
However, when the MVRV hits a value of 1.2, the possibility of STHs taking profits tends to grow during periods when the average STH is 20%+ in money. The recent rejection at $23.8k level resonates with this structure, as the STH-MVRV hit a value of 1.2 before stalling.
Glassnode suggests that a dip to $19.3k would bring STH-MVRV back to the value of 1.0, indicating that spot prices have returned to the cost basis of this cohort of new buyers. Consequently, $19,300 would be a magnetic target in terms of profitability and an incentive not to sell for STHs.
Glassnode is not alone in suggesting that $20,000 may not hold as support for BTC/USD, and that a new local low could form beneath that line in the sand. This is further reinforced by the realized price of the “old” supply, which currently sits at $23,500, making it a key battleground.
Moreover, the Bitcoin economy often reacts not only to widely observed technical analysis levels but also to the psychological cost basis levels of various investor cohorts printed on-chain. This takes place not only with respect to their realized price but also regarding the degree of profit and loss held within their supply. The market currently resides in a transitional phase bounded above by the Realized Price of Older Supply and also by the average Whale that has been active since the 2018 cycle bottom.
In conclusion, a dip to $19.3k may be necessary to cool Bitcoin profit-taking by short-term holders. The market is currently in a transitional phase, and while the psychological cost basis levels of various investor cohorts printed on-chain may play a role, it’s vital to pay attention to the MVRV metric and realized price of the “old” supply. This will provide a better understanding of the market’s profitability and help identify potential support and resistance levels.
