Bitcoin's price often plummets after falling below the on-chain trader realized price, a metric representing the average purchase price of all Bitcoin holders. This indicator has historically shown a -27% drop within 43 days after crossing below this threshold. The realized price acts as a dynamic support or resistance level, with bounces occurring when the price approaches from above and declines when it crosses below.
While predicting the market top is difficult, the on-chain realized price provides insights into short-term downward trends. When Bitcoin's price begins to trend upwards after a dip, it indicates a potential buy-back opportunity. To further analyze these movements, traders can use the Moving Average Convergence Divergence (MACD), which helps identify upward and downward trends based on two lines and a histogram. Green bars represent increasing bullish momentum, while red bars indicate increasing bearish momentum. By combining the on-chain realized price and MACD, traders can potentially identify downward trends and anticipate optimal re-entry points.
Key Points:
Bitcoin's price often drops significantly after falling below the on-chain trader realized price, a metric representing the average purchase price of all Bitcoin holders.
This indicator has historically shown an average -27% drop within 43 days after crossing below the realized price.
The realized price serves as a dynamic support or resistance level, indicating potential bounces when approached from above and declines when crossed below.
While predicting market tops is challenging, the on-chain realized price helps identify short-term downward trends.
When Bitcoin's price starts trending upwards after a dip, it might signal a buy-back opportunity.
The Moving Average Convergence Divergence (MACD) complements this analysis by identifying upward and downward trends, with green bars indicating bullish momentum and red bars indicating bearish momentum.
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