Currently, Bitcoin (BTC), the largest asset by market cap, is trading below the average price that investors originally paid, a marker known as the “realized price” level.
Realized Price (RP) – Currently around $19,700, it provides a dynamic support and resistance level, where bulls often place themselves at the levels they originally bought, with the aim of pushing the market back into profit.
Therefore, according to analyst Ekta Mourya, the fact that the Bitcoin price has fallen below the RP is a sign that the market may be approaching the bottom of the cycle. However, she notes that there may be more blood before the confirmation signal is given.
Bitcoin, an asset with a market cap of $331.27 billion, is currently trading at $17,202.10. Below, traders are experiencing unrealized losses.
Therefore, according to Moriah, periods when the Bitcoin price drops below the achieved price generally occur at the bottoms of an important cycle.
Historically, this has occurred at the bottoms of the main course. When BTC drops below RP, market investors are not comfortable holding losing positions and are afraid of incurring more losses. Particularly in a bear market, where the narrative around the asset is negative, investors usually wait for the cryptocurrency to surpass a achieved price level before increasing their exposure,” he says.
As such, she notes that when BTC rises above RP, it is a sign that the asset is entering a bull market phase.
“This narrative has been true throughout BTC’s movement through the adoption cycle. If BTC fails to overcome RP, a significant downtrend is usually created,” he says.
Given this, she indicated that investors need to keep an eye on $16,000 and $19,700.
“Any drop below $16,000, if it lasts for more than 24 hours, indicates a downtrend with a bottom established in this cycle. But if it breaks above the resistance above RP at $19,700, forget about selling as the bull market will resume.