Market Price Overview
Last week, Bitcoin opened at approximately $39,450 and closed around $38,470, marking a weekly decline of 2.5%. After failing to sustain a recovery in the previous week, the downward trend continued with significant volatility. The price briefly surpassed $40,000 during the week but also dipped to around $37,300. This decline has brought Bitcoin to a critical level, similar to the bottom seen in January. Overall trading volume has diminished considerably. This report provides a market overview, positioning insights, and highlights key price levels using on-chain data.
Technical Analysis
From a technical perspective, after failing to break through the $48,000 resistance previously, Bitcoin’s price has been on a consistent downtrend. Coupled with the Federal Reserve’s hawkish interest rate policies, this marks the fifth consecutive week of decline. The price is now within a descending channel, indicating bearish trends in both short-term and medium-term cycles. Immediate support is found near $38,000, while resistance lies around $39,700.
On-Chain Data Insights
Cost Basis Structure
To understand Bitcoin’s current consolidation range, we examine the cost basis for different holder groups. The short-term holder cost basis, currently around $46.8K, has been breached for some time. Bitcoin’s realized price stands at approximately $24.5K, which would serve as a strong support level in case of a significant downturn. Meanwhile, the long-term holder cost basis remains the lowest at about $13K.
The ratio between short-term and long-term holder cost bases serves as a market cycle indicator. A low ratio suggests a substantial gap between these groups’ costs, typical of accumulation phases where long-term holders buy consistently until their costs align with short-term holders. At that point, market-making and price appreciation often follow. Currently, Bitcoin is in a sideways consolidation phase. However, due to global economic tightening and high inflation, capital outflow from risk assets like Bitcoin has turned consolidation into a downward trend.
Entity-Adjusted URPD
The Entity-Adjusted UTXO Realized Price Distribution (URPD) offers a clearer view of support and resistance levels by showing the distribution of UTXOs created at various price points. Unlike holder cost bases, URPD reveals the strength of specific price ranges.
Current data indicates that $37.5K serves as a critical threshold for Bitcoin. A significant portion of UTXOs was created around the $37.5K-$38K range, making this a substantial support level for the current price.
Monthly Returns
Monthly returns further confirm Bitcoin’s sideways consolidation. Since June 2021, returns have oscillated without extreme peaks, even when Bitcoin reached its all-time high of $69K in November 2021. This suggests sustained investor buying during rallies, preventing returns from skyrocketing. At that time, various indicators suggested the market hadn’t peaked, fueling FOMO sentiment. Currently, the narrowing range of monthly returns implies that after one or two more oscillations, the market might break out of consolidation.
Percentage of Addresses in Profit
This metric helps identify market tops and bottoms. Historically, market bottoms coincide with only 50% of addresses being in profit. However, last May’s panic didn’t reach this level, and although current prices are higher than then, the percentage of profitable addresses has dropped to nearly 60%, below last May’s 70%. Rationally, the next support level might hover around 60%, similar to the May-September 2018 period. If this level breaks, the price could fall toward the realized price support of $24.5K.
Options Open Interest
In derivatives markets, Bitcoin options open interest (OI) declined noticeably this week, reflecting growing investor caution. With prices testing strong support near $37K amid downward pressure, the market is at a crossroads between rebound and breakdown. Low trading volume lacks the momentum for a sustained trend. Additionally, impending Fed rate hikes and stock market volatility have prompted investors to adopt conservative risk management strategies, withdrawing from spot markets and closing hedging positions, thus reducing OI.
Options Open Interest by Strike Price
Analyzing option strike prices reveals concentrated put options at $37,000–$38,000, while call options are spread relatively evenly between $39,000 and $41,000. This aligns with key technical levels: short-term support around $37,000 and resistance near $40,000. Investors can use this range for strategic position adjustments.
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Industry and Macroeconomic News
- The Central African Republic has adopted Bitcoin as legal tender, following El Salvador’s precedent.
- On May 1, the Solana mainnet experienced an outage, halting block production with an uncertain recovery timeline.
- Goldman Sachs has issued its first Bitcoin-collateralized loan.
- DEUS Finance on the Fantom network was hacked, resulting in a loss of $13.4 million and a 15% drop in DEUS token value.
Frequently Asked Questions
What is the significance of the realized price in Bitcoin?
The realized price reflects the average price at which all coins last moved, serving as a key support level during market downturns. It currently stands around $24.5K, indicating a potential safety net if prices decline further.
How do short-term and long-term holder costs influence market cycles?
When the cost basis ratio between these groups is low, it often signals accumulation phases. Long-term holders accumulate until costs align, potentially leading to price appreciation once market activity resumes.
Why is options open interest important for Bitcoin traders?
Options OI indicates market sentiment and positioning. A decline suggests reduced speculative activity and increased caution, often preceding significant price movements or continued consolidation.
What does the percentage of profitable addresses reveal about market bottoms?
Historically, market bottoms occur when fewer than 50% of addresses are in profit. Current levels near 60% suggest potential support, but a break below could indicate further downside.
How does URPD data assist in identifying support and resistance?
URPD shows where UTXOs were created, highlighting price levels with high transaction activity. These zones often act as strong support or resistance due to concentrated investor interest.
What impact do macroeconomic factors have on Bitcoin’s price?
Federal Reserve policies, inflation, and capital flow shifts significantly influence Bitcoin. As a risk asset, it often correlates with broader financial markets during periods of economic uncertainty.