Bitcoin (BTC) would need to return below $20,000 to reset a key metric which covers speculative profit-taking, data shows.
In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode revealed that short-term holders (STHs) may be dictating BTC price resistance.
Profit-taking reinforces resistance levels
As BTC/USD climbed towards $25,000, STHs — those holding coins for 155 days or less — began to see substantial returns on their investments.
This was captured by the market value to realized value (MVRV) metric, which compares the Bitcoin market cap to the value of coins moved on-chain.
“By comparing these two metrics, MVRV can be used to get a sense of when price is above or below ‘fair value,’ and to assess market profitability,” Glassnode explains in an accompanying guide.
MVRV passed 1.2 on the way to multi-month highs, coinciding with $23,800 appearing as an area of BTC price resistance.
As Glassnode writes, “the possibility of STHs taking profits tends to grow during periods where the average STH is 20%+ in money, returning a STH-MVRV above 1.2.”
“The recent rejection at the $23.8k level resonates with this structure, as the STH-MVRV hit a value of 1.2 before stalling,” it continued this week.
“Should the market return to $19.3k, it would bring STH-MVRV back to the value of 1.0, and indicate that spot prices have returned to the cost basis of this cohort of new buyers.”
$19,300 would thus form something of a magnetic target in terms of profitability and incentive not to sell for STHs.
As Cointelegraph reported, 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.
Bitcoin in “transitional phase”
Also in Glassnode’s crosshairs, meanwhile, are long-term holder (LTH) cost basis and the activities of whales invested in Bitcoin since the end of its last bear market in late 2018.
Related: BTC price ‘in the chop zone’ — 5 things to know in Bitcoin this week
The realized price of the so-called “old” supply — the price at which it last moved on aggregate — currently sits at $23,500, further reinforcing the area as a key battleground.
To the downside, Bitcoin’s combined realized price is at $19,800, again feeding into the idea that this zone could ultimately form support.
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