BTC May Need to Drop to $19.3K to Cool Bitcoin Profit Taking – New Data

Bitcoin (BTC) would need to return below $20,000 to reset a key benchmark related to 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 to $25,000, STHs – those who held coins for 155 days or less – began to see significant returns on their investments.

This was captured by the Market Value to Realized Value (MVRV), which compares Bitcoin’s market cap to the value of coins moving on the chain.

“By comparing these two metrics, MVRV can be used to get an idea of ​​when the price is above or below ‘fair value’, as well as assess the profitability of the market,” Glassnode explains in an accompanying guide .

MVRV passed 1.2 en route 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 increase during periods when the average STH is more than 20% in money terms, yielding an STH MVRV of more than 1.2.”

“The recent rejection at the $23.8k level resonates with this structure as the STH-MVRV reached a value of 1.2 before stalling,” it continued this week.

“Should the market return to $19.3k, that would return STH-MVRV to the value of 1.0, indicating that spot prices have returned to the cost base of this cohort of new buyers.”

Bitcoin STH-MVRV estimate annotated chart (screenshot). Source: Glassnode

So $19,300 would be kind 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 support BTC/USD, and that a new local low could be forming below that line in the sand.

Bitcoin in “transition phase”

Also in Glassnode’s sights, meanwhile, is the cost basis for long-term holders (LTH) and the activities of whales who have invested in Bitcoin since the end of the last bear market in late 2018.

Related: BTC price ‘in the chop zone’ – 5 things you need to know in Bitcoin this week

The realized price of the so-called “old” offering – the price at which it last rose in total – is currently $23,500, further cementing the area as a major battleground.

On the other hand, Bitcoin’s combined realized price is $19,800, again fueling the idea that this zone could eventually form support.

“The Bitcoin economy often responds not only to levels commonly observed in traditional technical analysis, but also to the psychological cost base levels of various investor cohorts imprinted on the tether. This happens not only with regard to their realized price, but also with regard to the amount of profit and loss within their offering,” concludes Glassnode.

“From this lens, the market is currently in transition, bounded above by the realized price of older supply and also by the average whale active since the 2018 cycle bottom.”

BTC/USD was trading at $22,400 at the time of writing on March 7, according to data from Cointelegraph Markets Pro and TradingView.

BTC/USD 1 hour candlestick chart (Bitstamp). Source: TradingView

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