Key points:

  • Bitcoin short-term holders form important nearby BTC price support levels, but a gap remains between $110,000 and $115,000.

  • Glassnode suggests that the price may drop to “fill” that gap.

  • Short-term holder profit-taking may cap BTC price upside at about $140,000 in the event of a breakout.

Bitcoin (BTC) may face a “key” support test that takes BTC price action to $110,000 next, new research said.

In the latest edition of its regular newsletter, The Week Onchain, crypto analytics firm Glassnode revealed a new BTC price magnet.

Glassnode: Bitcoin cost basis gap has “gravity”

Bitcoin’s short-term holders (STHs) could be responsible for the next BTC price dip, one that takes the market down 7%, back to $110,000.

STH investors, defined as entities hodling for up to 155 days, often provide BTC price support in areas where many enter the market. Their aggregate purchase price, variously known as cost basis or realized price, is a reference point during Bitcoin bull markets.

Glassnode said that when BTC/USD rose quickly from $110,000 to $115,000 this month, there was little time for investors to step in and buy.

“By examining Bitcoin’s Cost-Basis Distribution profile, we can see a significant concentration of investor cost basis levels around the $117k-$122k region. This highlights a large volume of investor accumulation has taken place at this elevated price point,” it said. 

“Noticeably, there remains an air-gap of volume just beneath the spot price, from $115k to $110k, a result of price rallying through the region without much opportunity for coins to transact along the way.”
Bitcoin cost basis distribution heatmap (screenshot). Source: Glassnode

The absence of cost-basis support leaves the door open for price to fill the void, much like it fills gaps in CME Group’s Bitcoin futures market created at weekends.

“Not all air-gaps like this one must be back-filled, but a gravity does exist there, and the market may want to re-confirm if support will step in. This marks this area as a key zone to watch in the event of a price pullback,” Glassnode added.

Speculator profits create BTC price targets

The STH cost basis can be broken down to reflect the aggregate purchase price of increasingly new investors. This, in turn, offers a ladder of potential support levels.

Related: ‘Biggest trade deal ever’ — 5 things to know in Bitcoin this week

Bitcoin STH cost basis by cohort (screenshot). Source: Glassnode

Those levels are also used to identify future prices at which STH cohorts will enjoy a certain level of profitability, and potentially sell their BTC.

Glassnode employs standard deviation to predict a possible local top level around $140,000 should BTC/USD return to price discovery. 

“Should the market break convincingly higher, the $141K region is likely to present the next major zone of resistance where sell-side pressure may intensify rapidly, aligned with the +2σ band,” it summarized.

Bitcoin STH cost basis standard deviations (screenshot). Source: Glassnode

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.