Bitcoin continued its recent bearish trajectory over the past day as the asset’s price has now fallen below $64,000. Here is what the next support looks like for BTC.
Bitcoin Has Strong On-Chain Support Between $61,900 & $63,800
According to data from market intelligence platform IntoTheBlock, BTC is floating just above the chain’s most sought-after point. Demand zones refer to price ranges where most investors last bought their coins.
This range can be determined through on-chain analysis, as the average cost base of each address in the network can be easily calculated from its transaction history.
Below is a chart shared by the statistics company that shows the various price ranges around the current asset price based on current demand.
In the graph, the size of the dot corresponds to the number of addresses purchased within the appropriate range. It seems that Bitcoin currently has high demand areas above and below it.
According to IntoTheBlock data, the lower range currently holds a cost base of approximately 1.23 million addresses to investors who bought 319,700 BTC. Now, what is the relevance of a quest like this?
For any investor, their cost base is important, so when the price is testing, they may be more inclined to act. Naturally, if many owners share their break level within a small range, the reaction from the retest will be greater.
For this reason, the most sought-after areas are considered important levels of support or resistance for Bitcoin. Cost base centers above price can act as walls of resistance, while those below can provide cushions of support.
With BTC hovering just above the most sought-after area between $61,900 and $63,800 after its recent decline, it is possible that the range could help the asset bottom.
As for the source of support or resistance effect provided by these demand areas, the answer lies in the psychology of investors. Owners who are currently losing money may look forward to prices reaching their cost basis to exit their initial investment.
This sell-off which could be seen in the re-evaluation of the level of many investors shared can be against BTC. Similarly, downside investors may respond to a reevaluation by buying more, as they may view the decline as an opportunity to dip, thereby supporting the stock.
Now it remains to be seen if the support area between $61,900 and $63,800 can end Bitcoin’s recent momentum or not.
BTC price
After the recent decline, Bitcoin recently entered the on-chain demand zone, as its price is now trading around $63,600.
