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Bitcoin Now Below "Realized Price" as Price Dips Below $21K, What This Implies

Sat, 08/20/2022 - 15:19
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Tomiwabold Olajide
Bitcoin now trading at "aggregate loss" following price dip beneath $21K
Bitcoin Now Below "Realized Price" as Price Dips Below $21K, What This Implies
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According to on-chain analytics firm Glassnode, "Bitcoin prices have broken back below the realized price after 23 consecutive days above the market cost basis." The realized price currently sits at $21,700, reflecting the aggregate acquisition price, valued at the time coins last moved on-chain.

Following this, according to Glassnode, "the market could be considered to be in aggregate loss." The short-term picture remains uncertain due to BTC prices currently being below the realized price. The cryptocurrency fear and greed index has shifted back to "fear," reflecting market trepidation.

The realized price of $21,700, which indicates the average value of the BTC coin supply as of the most recent on-chain transaction, was breached Aug. 19 when Bitcoin hit a low of $20,910. According to CoinMarketCap, the price of Bitcoin is currently down marginally during the previous 24 hours to $21,315.

Here's Who Sold BTC as Price Drops Below $22K

As investors unwind bets that the Fed could hike interest rates less than first anticipated, digital assets are becoming unnerved. Two Fed members, James Bullard and Esther George, gave different indications Thursday regarding the size of the interest rate hike in September. However, both highlighted the need to keep raising borrowing costs.

Bitcoin enters long-term accumulation

Bitcoin cycles are driven by an ever-evolving supply balance between longer-term investors and newer speculative buyers. Glassnode's RHODL Ratio distills this concept into an oscillator by comparing the USD wealth of one-week-old coins to those held by the 1-2 year old cohort.

According to a recent Glassnode analysis, the RHODL Ratio continues to be in a significant downtrend, indicating that the balance of USD wealth is continuing to shift back toward BTC holders of longer-term holdings. 

A decline in the RHODL Ratio implies that older coins hold the majority of the USD worth, which points to increased HODLing and long-term accumulation behavior. As a result, one could say that the current tendency for Bitcoin is long-term accumulation.

In the short term, the Fed's annual symposium in Jackson Hole, Wyoming next week remains an important event to watch regarding the Bitcoin price. There is already speculation that Fed Chair Jerome Powell may lean against a recent easing in financial conditions that has propelled the markets higher in recent weeks.

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About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.