On-chain data is suggesting that Bitcoin is facing minimal resistance, which could potentially lead to a rally towards a new all-time high (ATH). According to market intelligence platform IntoTheBlock, resistance levels seem light in the price ranges ahead. The strength of support and resistance levels in on-chain analysis is based on the number of investors who last bought their coins at those levels.
The chart provided by IntoTheBlock shows the cost basis distribution on the Bitcoin network at the time of the analysis. The size of the dot in the graph corresponds to the number of addresses that purchased their coins within that range. The data indicated that most investors should still be in the green, with few holders in a loss position. This suggests that there may not be many obstacles for Bitcoin to reach higher price levels.
Investors typically pay attention to their cost basis as it influences their decisions. Investors in loss may look to sell when the price retests their cost basis to break even and exit the market. Large red dots in the chart could potentially act as sources of resistance if a significant number of investors share their cost basis within a narrow range.
As investors in a loss position react to a retest of their cost basis by selling, those in profit may see it as an opportunity to buy more. Green dots in the chart can act as support levels for the cryptocurrency. Bitcoin falling to one of these green dots could provide a cushion for the coin to move through the relatively light red ranges and journey towards higher price levels.
While there may not be many investors eager to sell at their break-even point, another obstacle that Bitcoin could face is profit-taking. With the vast majority of investors in profits, many might be tempted to take some gains as the coin approaches a new ATH. It remains to be seen whether the market demand can absorb any potential selloff that might occur as a result.
Bitcoin had initially reached close to the $70,000 level but has since dropped towards the $67,800 mark. Despite this pullback, the overall sentiment is positive for Bitcoin, with minimal resistance and the potential for a rally towards new all-time highs. Investors are closely monitoring on-chain data analysis to gauge market strength and potential price movements in the coming days.
