While bitcoin (BTC) is attempting to climb back up, on-chain data indicates that sellers might present challenges around the $113,600 mark.
Data from CoinDesk reveals that BTC has recovered to $112,800 after dipping below $108,800 on Tuesday. This upward movement is possibly influenced by the S&P 500 reaching a new high and Nvidia, a major AI player and top company by market capitalization, reporting strong earnings.
The journey ahead could be difficult, as investors facing losses may want to sell if prices rise.
Glassnode, an analytics firm, stated in a Wednesday report that “Bitcoin’s current price is below the average purchase price for those who have held for 1 month ($115.6k) and 3 months ($113.6k), creating potential stress for these investors. Any price recovery might face resistance as short-term holders attempt to break even.”
Glassnode’s cost basis metric calculates the average acquisition price of digital assets by wallets with different holding periods. For instance, a three-month cost basis of $113,600 means that investors who bought assets in the last three months paid an average of $113,600.
Presently, spot market activity suggests a difficult climb for bulls, but ETF and corporate actions paint a different picture.
Timothy Misir, head of research at BRN, noted that “Spot demand is neutral, with perpetuals showing bearish signals and negative CVD. A funding rate of about 0.01% indicates fragile neutrality. A price increase above $112.4K with sufficient volume would open the door to $114K – $116K.”
Misir added that ETF inflows and increased corporate adoption of Bitcoin are removing significant amounts of supply from the market, which is a positive sign.
“ETF flows continue to increase, with $81 million flowing into Bitcoin ETFs and $307 million into Ether ETFs recently. ETFs, corporations, and governments are now absorbing approximately 3,600 BTC daily, which is about 4 times the amount miners are producing. Metaplanet has revealed a plan to raise $881 million to acquire $837 million in BTC between September and October, adding to their existing 18,991 BTC holdings,” he stated.
If BTC decreases in value, the $107,000 level will be a crucial support point.
Glassnode’s analysis indicates that the six-month cost basis is around that level. A drop below this point could trigger selling from these holders, potentially leading to a sharper decline.
“The 6-month cost basis is near $107k. A sustained move below this level risks triggering fear, which could accelerate downside momentum,” according to Glassnode.