Since last week, Bitcoin has been trading below the average purchase price of one of its most reactive investor groups. According to recent on-chain data, the world’s largest cryptocurrency could face more trouble if it doesn’t reclaim this key level.
Related Reading: Bitcoin Upper Trendline Resistance Is Holding Price Back, Can It Push It Below $60,000? Analyst Answers
Bitcoin’s Drop Under $80,000 Drives Realized Losses Upwards
In a post on X on May 22, analyst Axel Adler Jr. looked at Bitcoin’s struggle to get back above its Short-Term Holder (STH) Realized Price. He identified this level at around $80,000 (specifically $80,217). For context, the STH Realized Price tracks the average price newer Bitcoin investors paid. When Bitcoin trades below this level, it often means many short-term holders are sitting on unrealized losses, which can increase selling pressure.
Notably, Adler pointed out that these realized losses have gone up across the Bitcoin market. He reported that net realized profit is now roughly –$176 million, based on $366 million in realized losses versus $190 million in realized profits among short-term Bitcoin traders. Adler noted that as long as Bitcoin stays below the STH cost basis, any future market rebounds would just be temporary or unconfirmed pullbacks. In simple terms, these short-lived price recoveries below $80,217 might be relief rallies, not real signs of a broader trend change.
So, before market watchers can say Bitcoin is showing bullish intent, the price needs to break clearly above the former STH support level, which might now act as resistance and hold Bitcoin back. That’s because, as the price nears the STH breakeven (realized) price, investors are more likely to sell their positions, adding bearish pressure.
Related Reading: Ethereum Price Eyes Breakout Move, Traders Watch Key Resistance Closely
Coinbase Records Highest Selling Pressure Since February
In another post on X, Maartunn pointed out that Coinbase is seeing one of the strongest waves of bearish pressure since February. The key indicator here is the Coinbase Premium Gap, which mainly tracks buying and selling activity among US-based investors. According to the chart Maartunn shared, the Coinbase Premium Gap has dropped deep into negative territory, matching Bitcoin’s recent price weakness. When the premium is positive, it usually signals stronger buying on Coinbase. But a negative reading typically means more selling pressure or weaker demand from US investors.
Interestingly, strong negative Coinbase premium readings, like the ones we’re seeing now, have often appeared during market corrections or periods of short-term fear. However, they can also signal that a local bottom is forming if selling starts to fade.
As of now, Bitcoin is trading at $75,514, down 2.56% over the past day.
Featured image from Forbes, chart from Tradingview.com
Frequently Asked Questions
Here is a list of FAQs about Bitcoin struggling to reclaim a key price level with rising investor losses
BeginnerLevel Questions
Q Why is Bitcoin having trouble going back up to XXXXX
A Its a mix of fear and selling pressure Many investors who bought near that price are now underwater When the price gets close they sell just to break even which pushes the price back down Its like a ceiling made of sellers
Q What does it mean when more investors are seeing losses
A It means the current price of Bitcoin is lower than what most people paid for it If you bought Bitcoin at 60000 and its now at 55000 you are seeing a loss on paper
Q Is it bad that so many investors are losing money
A Its a sign of a weak or bearish market When most people are losing money they get scared and sell which can make the price fall even more It also means new buyers are hesitant to jump in
Q If I buy Bitcoin right now is it a good deal
A Not necessarily Just because the price is down doesnt mean it wont go lower A good deal depends on whether you believe the price will recover Right now the trend is weak so its risky
Intermediate Advanced Questions
Q What is the specific key price level you are talking about
A Often its a major moving average or a previous alltime high Its a price where a lot of trading volume happened in the past Breaking above it signals strength failing to break it signals weakness
Q How do realized losses affect Bitcoins price action
A Realized losses happen when someone sells for less than they paid When a large number of investors realize losses it creates a supply glut This supply overhang acts like a wall that the price has to chew through before it can go higher
Q Is this the same as a resistance level