- Analyst Darkfost said the Seller Exhaustion Model had fallen to levels typical of a bear market after bitcoin corrected by more than 10% from its previous high.
- Darkfost said easing selling pressure could help form a local bottom, but a sustained recovery would require fresh demand.
- CryptoQuant said bitcoin was testing traders’ realized price, which could act as support or become resistance if the price breaks below it.
Analyst Darkfost said bitcoin sellers were showing signs of exhaustion after the asset corrected by more than 10% from its previous high, citing the Seller Exhaustion Model. CryptoQuant said bitcoin was trading near traders’ realized price, making the market’s reaction around that level important for assessing whether support will hold or selling pressure will intensify.
Selling pressure eases
The Seller Exhaustion Model assesses whether sellers still have room to push prices lower by comparing the share of bitcoin’s supply in profit with average monthly volatility.
According to Darkfost, the indicator has again fallen to low levels typical of a bear market. The analyst said short-term profits had already been largely realized following bitcoin’s decline of more than 10% from its previous high.
Historically, easing selling pressure has created conditions for local bottoms to form. However, seller exhaustion does not guarantee a reversal. Darkfost said bitcoin would need demand for a sustained recovery and that such demand was currently lacking.
Bitcoin tests traders’ average cost basis
CryptoQuant identified traders’ realized price as another key reference point for the market.
The metric reflects the average purchase price of bitcoins that last moved on-chain between one and three months ago. It therefore provides an estimate of the average cost basis of relatively recent market participants.
Historically, the level has acted as both support and resistance. CryptoQuant said that when bitcoin trades above it within a positive market structure, a pullback to the average cost basis can attract buyers.
If bitcoin falls below the level, recent buyers begin to incur unrealized losses. A subsequent return to their average cost basis could prompt some traders to close positions at breakeven, turning former support into resistance.
CryptoQuant said the key question was whether bitcoin could hold near traders’ realized price. A successful defense followed by further gains would indicate that the level continued to support the price. A downside break without a swift recovery could instead point to mounting selling pressure.
Analysts had earlier recorded a rise in bearish sentiment toward bitcoin because of the elections.
Source: Incrypted
