Bitcoin’s recent plunge to $87,000 could be just the beginning of a deeper correction, according to compelling on-chain metrics. As market panic intensifies, key indicators suggest a potential drop to the $72,000 level.
Short-Term Holders Face Critical Test
On-chain analytics firm Glassnode has revealed that Bitcoin has breached a crucial support level – the Short-Term Holder (STH) Realized Price. Currently at $92,500, this metric represents the average purchase price for investors who bought BTC within the last 155 days.
With Bitcoin trading at $87,200, these recent investors are now facing average losses exceeding 6%. This situation marks a significant shift from the profitable positions they held in recent months.
Historical Patterns Point to $72K Target
Analysis of previous market corrections reveals a compelling pattern:
- May 2021 correction
- November 2021 correction
- April 2024 correction
In each instance, Bitcoin fell one standard deviation below the STH Realized Price. Currently, this critical zone lies between $71,000 and $72,000, suggesting a potential bottom target for the ongoing correction.
Cost Basis Distribution Reveals Weak Support
The Cost Basis Distribution metric provides additional evidence for potential downside risk. A significant concentration of investor positions exists above $87,000, while support remains notably thin until the $71,000-$72,000 range.
Market analyst Sarah Chen from CryptoView comments: “The lack of substantial buying pressure between current levels and $72,000 could accelerate any downward movement. Traders should prepare for increased volatility in this range.”
Market Implications
Several key factors could influence Bitcoin’s price action in the coming weeks:
- Short-term holder behavior: Continued selling pressure from recent buyers
- Support levels: Limited buying interest between $87,000 and $72,000
- Historical precedent: Previous correction patterns suggesting further downside
Expert Outlook
Digital asset strategist Michael Rodriguez notes: “While the $72,000 level represents a significant technical target, it’s important to remember that Bitcoin’s fundamental narrative remains strong. This correction could present a valuable accumulation opportunity for long-term investors.”
Current Market Status
Bitcoin currently trades at $87,200, representing a 7% decline over the past week. The market appears to be testing key support levels as traders assess the potential for further downside.
Source: NewsBTC