The biggest question so far during the bear phase is when and where Bitcoin prices will rebound. The latest on-chain data may provide new answers as to where the price bottom of the current bear market will be.
Here’s why $40,000 is so important to a bear market
In a recent post on the X Platform, crypto analyst Ali Martinez cited the $40,000 level as a potential bottom for Bitcoin prices during the current market phase. This forecast is based on the cost basis of an older cohort of investors known as long-term holders (LTH).
For context, long-term holder cost basis refers to the average price at which Bitcoin investors (those who have held the coin for more than 155 days) acquired the coin. This price level is often important because long-term investors are often referred to as diamond hands and are less likely to sell during periods of downside volatility.
Furthermore, since most long-term investors are typically still making profits even in the midst of a bear market, the LTH cost standard tends to act as a final support level during a bear market. Therefore, when Bitcoin price falls to this support, long-term holders will double their positions.
Source: @ali_charts on X
As observed in the chart above, this new buying activity by long-term holders will push the price of the premium cryptocurrency above its cost basis. According to the highlighted data, the cost basis for LTH is currently around $40,363, which is around 40% off the current price.
If Bitcoin price faces further downward pressure and approaches this cost benchmark, increased re-accumulation by long-term investors could support the price. Therefore, this cost base could be the bottom of the current bear market.
Conversely, if selling pressure overwhelms the re-accumulation momentum of long-term holders, the Bitcoin market could face an even more severe correction.
Bitcoin price overview
As of this writing, the price of BTC is around $68,330, reflecting an increase of nearly 1% over the past 24 hours. However, this one-day action is unlikely to correct the more than 2% price decline witnessed by this leading cryptocurrency over the past week. According to data from CoinGecko, the price of Bitcoin is currently down more than 45% from its all-time high.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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