Bitcoin Bullish as $20,000 Holds as New Data Suggests Bottom is In

BTC bulls are hoping to confirm $20,000 as a support level, as new data suggests that the bottom might be in.

It looks like Bitcoin's price support at $20,000 is strong, with multiple indicators pointing to this being a new bear market floor. This is good news for BTC holders, as it suggests that the value of their investment is unlikely to drop below this level in the near future.

I believe that the recent Bitcoin rally is a sign that the cryptocurrency is beginning to recover from the bear market it has been experiencing. While it failed to break the $21,000 support level, I believe that this was just a temporary setback. I believe that Bitcoin is currently hammering out a bottom in the market, which will provide a solid foundation for future growth.

The Realized Price Distribution: A Comprehensive Overview

Bitcoin's realized price is a key indicator of the average cost of Bitcoin for buyers. If the price of Bitcoin falls below a user's realized price, they may be experiencing an unrealized loss. The UTXO Realized Price Distribution provides insight into how the price of Bitcoin is distributed across different acquisition prices.

The 2019 bear market has highlighted the fact that 30% of BTC's total supply is concentrated within the realized price range. This indicates that there is significant potential for price growth in the future, particularly if the market breaks out above the realized price range as it did in April 2019.

Bitcoin UTXO realized price distribution in April 2019. Source: Glassnode
As Bitcoin's price surged in April 2019, so did the value of UTXO's (unspent transaction outputs).

Looking at the current market, it appears that Bitcoin's realized price is consolidating around 20% of the total supply between $17,000 and $22,000. While this suggests that more redistribution may need to occur, the consolidation is significant and highlights a resilient holder base. This is a positive sign for Bitcoin's future, as it suggests that there is a strong demand for the currency at current prices.

Bitcoin UTXO realized price distribution in October 2022. Source: Glassnode
In October 2022, the distribution of realized prices for Bitcoin UTXOs will be as follows:

How long until the breakout?

It is believed by some that Bitcoin's valuation model may give insight into when the next breakout, like the one in April 2019, could occur. According to historical data, prior cycles have seen the realized price range last between 5.5 and 10 months. However, in the current cycle, Bitcoin has only been within the range for ~3 months. This could mean that the next breakout may not occur for several more months, as sideways trading continues.

Historic Bitcoin valuation model with realized price ranges. Source: Glassnode
The Glassnode bitcoin valuation model is based on realized price ranges. This means that it takes into account the prices at which bitcoin has been traded in the past, and uses this information to predict future prices.

Long-term investors are still in the black, despite recent market volatility.

Looking at the price distribution in terms of long-term holders versus short-term holders can provide some valuable insight. Currently, long-term holders make up the majority of the supply that is in profit. This means that they have less pressure to sell and if they do sell, they will be in profit. The total amount of supply that is in profit is currently at 56%, but for long-term holders it is at 60%.

Total supply in profit and long term holder supply in profit. Source: Glassnode
The total supply of Bitcoin that is in profit is increasing, according to data from Glassnode. This is good news for long-term holders of Bitcoin, as it means that more people are holding onto their BTC and not selling at a loss.

The current market cycle may not last as long as previous ones, but signs are positive for a repeat breakout. With long-term holders being a overwhelming majority of the supply in profit, sell pressure may be minimized in the event of upcoming sell-off events. This could mean good things for the market in the long run.