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The uptrend everyone is expecting on the cryptocurrency market may in fact start after conditions described by Blockware lead analyst Will Clemente are met.
The cost basis term is often used to describe the average entry price of investors into an asset. The short-term holder cost basis shows that the average entry of short-term Bitcoin holders is currently at $47,000.
Bitcoin price currently finding a delicate equilibrium between Short term holder cost basis at $47,000 and HODLer implied price at $40,000
The bullish scenario would be a push above STH cost basis, while a bearish cross would be a sign of potential capitulation to come. pic.twitter.com/dud9aDVlY1
Whenever the short-term cost basis crosses the HODLer Implied Price, investors receive either bullish or bearish signals, depending on the direction of a cross. In the current case, if Bitcoin continues to drop further, the market will most likely dive deeper as selling pressure from short-term traders aggravates.
The second metric used by the Blockware analyst is the HODLer implied price, which is essentially the realized price of an asset divided by its liveliness, which is a metric that reflects the behavior of holders by measuring the number of liquidations which causes a metric’s rise. In case coins remain dormant, the metric declines.
If the HODLer implied price metric crosses the short-term holder cost basis, the market should expect a rise in liquidation volume, which creates enormous pressure on the price. In case STH distances from the HODLer implied price, the market remains more stable.
While Bitcoin’s move above $47,000 may become an extremely bullish event for the cryptocurrency market, we may still see enormous pressure on the price as some traders may decide to break even on their positions after a massive 20% dip.
At press time, Bitcoin is trading at $40,456 after tumbling down to $38,111, which caused extreme fear on the market.
Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.
Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.
Disclaimer: Any financial and market information given on U.Today is written for informational purpose only. Conduct your own research by contacting financial experts before making any investment decisions.