The Bitcoin price is currently fluctuating within the recently established $80,000 – $85,000 range, displaying a degree of uncertainty in its movements. After the leading cryptocurrency slipped below $90,000, investors have been speculating whether this ongoing correction presents a “buy the dip” chance or if the market has already reached its peak.
While there is no definitive way to eliminate these uncertainties, on-chain data can offer significant insights into potential future trends. The most recent on-chain data indicates that the level highlighted below is crucial for investors to monitor before making a return to the market.
Key Level to Monitor Before ‘Buying The Dip’
In a recent update on the X platform, crypto analyst Maartunn indicated that it may not be technically prudent to reenter the Bitcoin market at the current pricing. This assessment hinges on the movement of Bitcoin prices relative to the current average cost basis of short-term holders (STH).
The STH average cost basis metric calculates the average price at which short-term holders (those who have held Bitcoin for less than 155 days) bought their coins. This metric serves as a psychological reference point for BTC investors and could be pivotal for price analysis, particularly during bullish trends.
Typically, Bitcoin trades above the short-term holders’ average cost basis during bull markets, indicating strong buying activity and positive sentiment among short-term investors. Conversely, when BTC’s price falls below this cost basis — as observed during the current correction — it suggests that short-term investors are experiencing losses, which could trigger a sell-off and contribute to increased bearish pressure.
Data from CryptoQuant reveals that Bitcoin is presently trading at 6% below the short-term holders’ average cost basis of $90,950. With the flagship cryptocurrency priced below the realized value for short-term holders, it is likely that the BTC price could encounter additional selling pressure as this group may seek to minimize their losses.
Based on this reasoning, Maartunn suggested that investors may want to hold off until Bitcoin’s price exceeds the STH average cost price before reentering the market. Notably, short-term investors still appear to be accumulating Bitcoin, as crypto analyst Ali Martinez noted in a post on X that these holders have acquired over 35,000 BTC in the past four days.
Bitcoin Price Overview
As of this moment, BTC’s price is just below the $86,000 threshold, reflecting an increase of over 2% within the last 24 hours.
