Short-Term vs. Long-Term Holders
On-chain data indicates that short-term holder wallets, which are currently in the red, might sell near their breakeven point at $65,000. In contrast, long-term holder wallets, with an average cost basis below $20,000, are more likely to hold or increase their Bitcoin holdings.
Current Market Overview
As Bitcoin (BTC) attempts to recover from July’s losses, new challenges have emerged, suggesting potential resistance at $65,000. The leading cryptocurrency by market value is trading nearly 1% higher at $63,200, striving to regain ground after ending June with a 7% loss. This decline, reversing May’s gains, was largely due to miner selling and concerns that ETF inflows were driven by non-directional arbitrage bets rather than outright bullish bets.
Resistance at $65,000
The recent drop has pushed Bitcoin prices below the aggregate cost basis for short-term holders, which is around $65,000 according to data from LookIntoBitcoin. On-chain analytics firms view the realized price as the aggregate cost basis, representing the average price at which coins were last moved on-chain.
“Short-term holders now face losses and may attempt to exit the market at breakeven, potentially increasing selling pressure near $65,000,” analysts at Blockware Intelligence noted in their latest newsletter. They added that the price of Bitcoin has fallen below the short-term holders’ aggregate cost basis for the first time since August 2023. “In the short-term, we should expect some resistance around the ~$65,000 level as short-term market speculators may look to exit their positions at a breakeven level.”
Long-Term Holder Dynamics
Meanwhile, long-term holder wallets are incentivized to maintain or even boost their Bitcoin stash, as their average cost basis is significantly lower, around $20,000. This cost basis is nearly 70% less than Bitcoin’s current market price, making them less likely to sell.
Additionally, Bitcoin’s 15% pullback from its record high of over $73,500 in March may seem substantial to traditional market investors, but it is a normal correction in a bull market for long-term crypto holders. “During the 2017 cycle, BTC had 10 drawdowns of 20% or more. This is a normal, healthy bull market correction,” Blockware noted. “Bitcoin’s price volatility shakes out weak hands and provides opportunities for strategic capital deployment to those with a longer time horizon.”
Conclusion
While Bitcoin is showing signs of recovery, the $65,000 resistance level could pose a significant challenge due to potential selling pressure from short-term holders. However, long-term holders remain a stabilizing force, incentivized to hold or increase their positions, which could support the market in the longer term.
