Bitcoin repeats a key bear market move and $19,000 becomes key BTC price zone
The cost base of investors is a major point for ARK Invest, which is part of a “tug of war” in the 2022 Bitcoin bear market.
Holding Bitcoin (BTC) at $19,000 could be more important than traders realize, new data reveals.
In the latest edition of its monthly report series, “The Bitcoin Monthly,” investment management firm ARK Invest noted an ongoing battle defending the cost base of Bitcoin investors.
Bitcoin Investor Cost Base Drives Market
Bitcoin price action is currently characterized by volatile movements within a clearly defined range only around $4,000.
Having held since June, this range contains what immediately stands out as a focal point – the previous cycle’s all-time high of $20,000.
However, with the BTC/USD pair crossing that threshold frequently, traders have long looked for alternative lines when it comes to new trends for the pair.
For ARK and the report’s guest contributor, Reflexivity Research co-founder William Clemente, it’s $19,000, which could serve as important support.
This is due to Bitcoin’s so-called investor cost basis—the aggregate price at which the BTC supply was purchased, minus the portion held by miners. “For most of September, bitcoin traded between two important historical levels: its 200-week moving average ($23,500) as resistance and its investor cost basis as support ($19,000),” explains ARK. The price of BTC is now at $19,000, which is the level that, if breached, would lead to considerable losses across the entire Bitcoin investor base.
“As strong holder behavior battles against a weak macro environment, resolution on either side will play a significant role in bitcoin performance in the short to medium term,” the report added.
As Cointelegraph reported this week, analysts are closely watching the global proportion of supply that currently remains at a loss.
In previous bear markets, this ratio was always above 60% before the price bottomed, leading them to conclude that in 2022, the market has yet to fall.
Investor trends echo 2018 behavior
Other figures covering long-term holder (LTH) losses paint a similar picture in mid-September: BTC price action could head to $14,000 before echoing previous bear market bottoms.
Continuing, ARK noted that the cost basis of LTHs and short-term holders (STHs) had crossed for the first time since 2018 – the year saw the $3,100 macro bottom at the end of Q4.
An STH is defined as an entity holding BTC for up to 155 days, with LTHs making up investments for longer periods.
“STH cost basis has crossed below LTH cost basis, a signal that is typically correlated with high conviction market lows,” he commented. The report.
“Likely a sign of low speculative excesses, this crossover suggests that short-term holders have capitulated or are aging to become long-term holders.”
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