Bitcoin’s Volatility Sparks Concerns Among Investors

The cryptocurrency market has been witnessing significant fluctuations in the past few days, with Bitcoin, the largest digital asset, experiencing a notable decline in price. The flagship asset has dropped close to the $91,500 price level, sparking concerns among investors and traders about its capacity to maintain its present levels.

Aftermath of Huge Capital Outflows in Bitcoin

According to reports from Alphractal, an advanced investment and on-chain data platform, Bitcoin has witnessed a huge wave of capital outflow. This trend indicates a shift in investors’ confidence in BTC’s prospects, as they reassess their positions following the asset’s latest price movements toward a downside trajectory.

The withdrawal of capital from Bitcoin raises the possibility that market makers are looking for fresh price points at which to reenter the market. Alphractal has underscored potential scenarios and price points that may develop in the upcoming days, highlighting crucial support areas ahead.

Key Support Levels to Watch

Alphractal notes that the Short-Term Holder Realized price is currently situated at the $86,200 level. This region frequently serves as support during bull markets and is the initial target if Bitcoin continues to drop. Bullish momentum usually persists when BTC recovers from this point.

Another price level to watch is $80,700, representing an area of hope/denial band. The STH & LTH Sentiment Price Band indicator identifies this range, which has historically maintained bullish trends and reflects the sentiment thermometer of both short and long-term investors.

Potential Downside Risks

However, should the market experience another collapse akin to the one that occurred in May 2021, Bitcoin might fall to lower support levels between $66,000 and $60,000. These zones correspond to metrics like the Active Realized Price and True Market Mean Price, which determine the ideal average price of the blockchain while omitting newly mined coins.

Short-Term Holder Cost-Basis at Critical Level

Bitcoin’s latest price movement has put the Short-Term Holder Cost Basis at a critical level. Data from Glassnode, a leading on-chain and financial platform, reveals that the short-term holder cost basis is currently positioned at the $88,000 mark for assessing the momentum of BTC’s price.

Using the UTXO Realized Price Distribution (URPD) metric, Glassnode finds that there is insufficient volume below the STH cost basis. According to the platform, a decisive loss of this level could trigger an extension of the downswing.

Conclusion

As Bitcoin consolidates near key support levels, the downtrend may be halted once substantial capital begins to enter the market. Market participants continue to observe the situation for signs of a possible rebound or an extended downward pressure. With the Short-Term Holder Cost Basis at a critical level, investors are closely watching the asset’s price movement, waiting for a decisive break above or below the current levels.

As reported by Bitcoinist.com.

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