A new analysis released by CryptoQuant, written by contributor CryptoMe, suggests that Bitcoin (BTC) still has room to fall this year, and the collapse could provide the ideal buying opportunity for long-term investors.
Bitcoin Bottom at $54,000?
On a Monday reportCryptoMe highlighted the cryptocurrency’s Realized Price indicator as a key reference point and argued that periods when spot prices fall at or below that level have historically been attractive accumulation zones.
The Bitcoin Realized Price is, simply put, the average cost basis of the market: the price paid for all coins in circulation, weighted by when they last moved. Notably, this Bitcoin metric has often acted as meaningful support during previous bear markets.
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When Bitcoin spot prices fall below the Realized Price indicator, the analyst says, the market is often in a state of capitulation – characterized by negative news, extreme fear and pervasive pessimism.
Bitcoin’s realized price is around $54,000, compared to a market price of almost $67,000 at the time of writing – a difference of around 19.4% between these levels.
CryptoMe argues that if the cryptocurrency were to fall to its realized price or lower, that area would be a potential market bottom in the current situation. bear cycleand an optimal zone for spot purchases and incremental accumulation.
Prepare for drawdowns
CryptoMe also reminded investors of two important caveats. First, historical episodes show that when Bitcoin moves below the limit Realized priceit can remain there for very different periods of time – from as little as seven days to as long as 301 days.
The analyst warned potential buyers at these levels to be prepared for a possible extended period of underperformance before prices recover.
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Secondly, a drop below the realized price indicator does not imply a firm bottom: CryptoMe claims this is broader crypto market could fall further, and investors should be ready for deeper declines.
Despite these warnings, the analyst concluded on a bullish note: “Below $54,000, Bitcoin is cheap compared to the market average, and it is a perfect place to gradually accumulate and accumulate Bitcoin.”
After failing to break the key resistance level at $76,000 last week, Bitcoin has fallen nearly 12% to its current trading price.
This increase in volatility is linked to increased tensions in the Middle East and rising oil prices, which have caused investors to withdraw their money from riskier assets. As a result, Ethereum (ETH), XRP, and Solana (SOL) have all followed Bitcoin’s price movement and fallen to crucial support levels.
Featured image from OpenArt, chart from TradingView.com
Credit : www.newsbtc.com
