An on-chain indicator suggests that most bitcoins Investors are currently under pressure, as 63% of all wealth invested in the largest cryptocurrency has a base cost greater than $88,000, according to data from Checkonchain.
That means that most of the capital entered the market at a higher price than what BTC is currently trading at. Invested wealth refers to the total value of capital invested in bitcoin when the coins were last moved up the chain. This is different from the cost basis, which is the average price at which that bitcoin was acquired.
This information comes from a measure called UTXO Realized Price Distribution (URPD). URPD illustrates the price levels at which the existing supply of bitcoin last moved up the chain. Each bar represents the number of bitcoins whose most recent transaction occurred within a specific price range.
The price of bitcoin has been limited between $80,000 and $90,000 since November. URPD highlights how much capital is currently underwater. Tens of billions of dollars are between $85,000 and $90,000. A price move below $85,000 could intensify selling pressure as investors try to limit losses. Long-term holders are already selling at the fastest pace in six months.
To increase the risk, there is relatively little supply between $70,000 and $80,000. If the $80,000 level fails, last tested in November, a quick move towards $70,000 becomes more likely.
Heading into February, Bitcoin is on track to end January little changed, without the typical relief rally after seeing three consecutive months of declines. February has historically been a strong month, with average gains of around 13%, according to data from Coinglass. Whether history repeats itself may depend on how the market absorbs the current underwater oversupply.
