Bitcoin's On-Chain Data Indicates Potential Correction: Monitor These Two Key Levels
Unleashing the support zones of Bitcoin
Bitcoin has surged past the $104,000 mark after a tumultuous trading week, fueled by political dust-ups and corporate squabbles. However, this crypto titan remains precarious, with prices dipping as low as $101,000 last Thursday. As there seems to be a lack of clear positive market catalysts, glass-half-empty analysts foresee a potential price correction in the near future. But where might Bitcoin find solid footing if the storm comes?
Finding Solace in Support Zones
Analytics powerhouse Glassnode shared some intriguing insights on Friday, hinting at Bitcoin's potential lifelines using the Work of Cost (WOC) price model. This model assesses Bitcoin's value based on acquisition costs by tracking the price points at which currently circulating coins were bought.
Glassnode's analysis indicates that 95% of the Bitcoin supply on the market was purchased at lower prices than the current support level of approximately $103,700, which aligns with the 0.95 SSD quantile. This underscores the fact that only 5% of Bitcoin holders are sitting on losses if they're holding at this price point. If selling pressure proves too much at this level, Bitcoin might slide down to the next price floor around the $96,500 mark, which represents the 0.85 SSD quantile and a potential drop of 7.2% from current prices.
However, even with this projected price decline, the broader bull rally should still remain intact, provided the crypto market manages to secure some positive drivers like macro quantitative easing, increased institutional investments, or ETF inflows.
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With Bitcoin trading at $104,418 at press time, the broader crypto market is displaying a 2.98% price increase over the past 24 hours. Meanwhile, the daily trading volume has witnessed a drop of 20.02%, currently valued at $51.67 billion.
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Diving Deeper
While the Work of Cost (WOC) model may not be commonplace in mainstream onchain or technical analysis, it's occasionally referenced in more advanced models as part of cost basis tracking or accumulation/distribution analysis.
Recent assessments from onchain analytics firms like Glassnode focus on cost bases, support, and resistance rather than explicitly referencing the WOC price model. However, these analyses suggest that Bitcoin is presently in a support zone that has matched previous bullish cycle lows, potentially providing robust foundations for upward momentum. This support zone often lines up with long-term holder accumulation areas, where sell-side pressure tends to subside.
If selling pressure overwhelms this support zone (for instance, due to negative macroeconomic factors, delayed rate cuts by the Federal Reserve, or capitulation from long-term holders), Bitcoin could sink to lower levels. While specific downside targets aren't always given, historical support levels have generally been around 30–40% below current cycle highs. However, market consensus doesn't specify an exact target if WOC-based support is lost.
Feeling Lucky?
Bitcoin might maintain its current support level, ride up to $120,000 or even surge northward as high as $230,000 if the broader market trends favorably. Alternatively, overwhelming selling pressure could force Bitcoin to retreat sharply to levels where short-term holders and speculative traders have stop losses, potentially plunging to the $94,000 to $100,000 range.
Ultimately, a balanced approach is advisable: stay bearish if the wind shifts against Bitcoin, but remain hopeful as the coin may weather the storm and emerge victorious.
Innovative Support from Cryptocurrency Technology
The Work of Cost (WOC) price model, a uniquely technological assessment for Bitcoin's value, shows 95% of Bitcoin supply was purchased at lower prices than the current support level, indicating a strong foundation for potential upward momentum despite the possibility of a price correction.
Unyielding Technology-Driven Future for Cryptocurrency
Bitcoin's surging value and the resilience displayed by its support zones, as demonstrated by the WOC model and other analytical tools, underscore the role of technology in securing and driving its future value, even in the face of stormier market conditions.
