Key Takeaways
Why is the $108k level a key support?
This level represented the average cost basis of the 3-6 month Bitcoin holder cohort, making it a strong support level.
Why could a Bitcoin recovery be difficult?
The $116k-$117.5k area was a supply zone on the price charts and the liquidation heatmap, and the CBD chart showed holders at a loss might sell at break-even during a price bounce.
Bitcoin [BTC] saw a surge in spot trading volume after the liquidation event on the 10th of October.
AMBCrypto reported that the Binance spot volume for Bitcoin has stabilized between $5-10 billion daily. Previously, the spot volume had ranged between $3 billion and $5 billion.
A larger number of BTC whale deposits were spotted, which could delay any potential price recovery. The poor price performance in October did not deter Strategy [MSTR] from buying Bitcoin for $18.8 million.
The UTXO realized price age bands can help identify the behavior of different investor groups.
It plots the average cost basis (realized price) for each specific age band, which refers to when the particular cohort of holders entered the market.
An examination of the UTXO realized price metric showed that Bitcoin was trading at a critical support level.
Crypto analyst Burak Kesmeci demonstrated that BTC prices held steady at the 3-6 month UTXO realized price at $108.3k.
The price has found support where medium-term holders have their average cost basis. It remains to be seen if the buyers can defend this support level.
A Bitcoin recovery could face setbacks
The cost basis distribution chart plots the total supply held by addresses with an average cost basis within specific price buckets.
The supply is shown by the color intensity, while the price buckets and timestamps form the other two axes of the chart.
Bitcoin was trading at a support level at $108k, with a sizeable supply having an average cost basis at or just under $108k.
The CBD chart also highlighted the large amount of supply overhead, which represented holders at a loss.
A price recovery could be halted by selling pressure from holders opting to exit the market at break-even.
The liquidation heatmap showed a magnetic zone overhead at $116k. It is likely to pull prices higher in the coming days, but these magnetic zones tend to act as reversal spots.
The lack of strong demand could see a potential BTC recovery fizzle out around $116k.
Remember, the $117.5k is a strong technical resistance level as well. Such a rejection could drive Bitcoin to fall to the liquidity pocket at $99k-$102k.
