Bitcoin's Rebound Could Hit $65K Resistance, On-Chain Analysis Suggests

Short-term holder wallets are in the red and may liquidate near their breakeven level of $65,000. Long-term holder wallets, with an average cost of less than $20,000, are incentivized to hold or boost their coin stash.

As Bitcoin (BTC) looks to recover from its July losses, new challenges loom, with on-chain data suggesting potential resistance at $65,000. The leading cryptocurrency by market value was trading nearly 1% higher at $63,200 at the time of writing, aiming to regain some stability after ending June with a 7% loss. June's drop, which reversed May's upswing, was mainly due to miner selling and concerns that ETF inflows represent non-directional arbitrage bets rather than outright bullish bets.

Notably, the decline has pushed prices well below the widely tracked aggregate cost basis of short-term Bitcoin holders, or wallets storing coins for 155 days or less. As of writing, the aggregate cost basis for short-term holders was $65,000, according to data source LookIntoBitcoin. On-chain analytics firms consider the realized price as the aggregate cost basis, reflecting the average price at which coins were last spent on-chain.

In other words, short-term holders now face losses or hold positions in the red and could attempt to exit the market at a loss or breakeven, potentially adding to selling pressure near $65,000. "The price of Bitcoin has fallen below the aggregate cost basis of short-term holders for the first time since August 2023. In the short term, we should expect some resistance around the ~$65,000 level as short-term market speculators may look to exit their positions at a 'breakeven' level," analysts at Blockware Intelligence said in the latest edition of their newsletter. "Last summer, when BTC lost the STH RP [realized price] support level, price traded sideways for another two months before finally breaking out again," they added.

Meanwhile, long-term holder wallets are strongly incentivized to maintain or boost their coin stash, as their average cost is less than $20,000, according to LookIntoBitcoin. Yes, you read that right; their average cost basis is nearly 70% less than BTC's current market price.

Additionally, Bitcoin's 15% price pullback from the record high of over $73,500 in March may appear substantial for a traditional market investor but is a normal bull market correction for a long-term crypto holder. "During the 2017 cycle, BTC had 10 drawdowns of 20% or more. This is a normal, healthy bull market correction. Bitcoin’s price volatility shakes out weak hands and provides opportunities for strategic capital deployment to those with a longer time horizon," Blockware noted.