Bitcoin's $97,000 to $98,000 Zone Critical for Price Movements

Glassnode, an on-chain analytics firm, has identified the $97,000 to $98,000 zone as a critical area for Bitcoin. This zone is significant due to the Cost Basis Distribution (CBD), an indicator that measures the amount of Bitcoin supply last purchased or transferred at various price levels. The dense supply zone between $97,000 and $98,000 suggests that a large number of investors or a few significant holders acquired Bitcoin within this range. This concentration of supply could make retests of this level significant for Bitcoin's price movements.

When the market sentiment is bullish, holders may react to retests of their cost basis from above by buying more, believing that the same level would prove profitable again in the future. However, given the current volatile geopolitical situation, a continued decline in Bitcoin's price could see this zone acting as the next true pivot for the cryptocurrency, according to Glassnode.

The CBD indicator provides insights into where the cryptocurrency’s supply is concentrated but does not reveal who bought or sold at those price levels. Glassnode's behavioral cohorts, which divide investors based on their behavior, address this limitation. These cohorts include First Buyers, who are purchasing Bitcoin for the first time and have seen a rise in supply, indicating fresh demand. Momentum Buyers capitalize on market momentum during uptrends, while Conviction Buyers purchase despite falling prices. Loss Sellers and Profit Takers correspond to investors exiting at a loss and profit, respectively. Recently, the Loss Sellers cohort has seen an increase, suggesting that weak hands have been capitulating. However, Conviction Buyers have also increased, indicating that sentiment is not collapsing entirely.

Glassnode's analysis highlights the importance of the $97,000 to $98,000 zone for Bitcoin. This zone could act as a significant pivot point if the cryptocurrency's price continues to decline, given the concentration of supply and the behavior of different investor cohorts. The firm's insights provide valuable context for understanding potential price movements and investor sentiment in the Bitcoin market.