How Low Can Bitcoin Go? CryptoQuant Head Reveals Target

In the midst of Bitcoin’s recent price struggle, CryptoQuant head of research has revealed the level Bitcoin can potentially sink down to.

In a new post on X, CryptoQuant Head of Research Julio Moreno has discussed how low the BTC price can go following the latest correction. “To evaluate this I like to look at the realized price of 1 to 3 month-old holders,” explains Moreno.

The “realized price” refers to an indicator that basically tells us about the average price at which investors in the Bitcoin market acquired their coins. This metric uses on-chain data to find the cost basis of holders, by assuming that the last transfer of any coin in circulation was when the coin changed hands.

When the spot price of the cryptocurrency is above the realized price, it means that the investors as a whole are carrying some unrealized gains currently. On the other hand, the price being lower than the metric suggests the overall market is underwater.

Naturally, when the realized price and spot price are exactly equal, the average investor in the sector could be assumed to be just breaking even on their investment.

In the context of the current topic, Moreno hasn’t applied the realized price to the entire user base but rather to just a segment of the investors: the 1-to 3-month-old holders.

The below chart shows the trend in the Bitcoin realized price for this particular holder group over the last year:

The 1 to 3 months old investors make up a part of the wider “short-term holder” (STH) cohort. The STHs are defined as investors who bought their coins within the last 155 days.

Thus, the holders who bought between 1 and 3 months ago would be on the younger side of this group. Generally, the STHs behave in a fickle manner, reacting to any significant changes in the market, like a rally or crash.

The more mature a holder’s coins become, the less likely the investor turns to show any such reaction. Since the 1 to 3-month-old hands, although not the youngest, are still young STHs, they are likely to react to price changes.

According to Moreno, the realized price of these STHs has “represented a support level historically and during 2023.” The reason behind the level being supported is likely the fact that these investors would closely watch their average cost basis and move to buy more when the price dips around there if the general mood around the market is bullish.

In times when the prevailing Bitcoin trend is bearish, the level can act as resistance instead, as these STHs would be willing to exit the market at their break-even point.

At present, the realized price of the 1 to 3-month-old STHs is $36,700. Given the historical pattern, it’s possible Bitcoin might dip to around there before finding support, if the current correction continues for long.

Since the asset’s price plunged under the $45,000 level a few days back, the Bitcoin price has been trading sideways around the $42,500 level.