Cryptocurrency markets have been under severe bearish pressure over the past week, with Bitcoin prices falling below their opening price this year. At the same time, other large assets are also struggling, posting double-digit losses in the past few days.
In recent months, talk has swirled around the end of the typical four-year cycle and a change in the structure of the Bitcoin market, with spot exchange-traded funds (ETFs) providing fresh, stable liquidity. However, the latest on-chain data indicates that BTC ETF investors may be under pressure in the coming days.
$79,300: Pain threshold for BTC ETF buyers
In a recent post on the CryptoQuant platform, IT Tech shared insights into current Bitcoin market trends and how they may impact relatively new investors known as BTC ETF buyers. According to on-chain analysts, these exchange-traded fund holders are “about to face their first real test.”
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The relevant metric here is the Bitcoin US ETF Realized Price, which tracks the average purchase price of BTC held by US-based exchange-traded funds. This indicator provides insight into the profitability of institutional investors and holders.
However, IT Tech made an interesting argument, pushing the idea that ETF capital inflows are “institutional funds.” The cryptocurrency analyst noted that most of the value added through U.S.-based exchange-traded funds is primarily purchased by individual investors through their brokerage accounts.
As seen in the chart above, the realized price of Bitcoin US exchange traded funds is currently around $79,300. According to IT Tech, ETF buyers often feel “smart” when the price is above realized price, but panic (as most retail investors do) when the price is below cost basis.
According to on-chain analysts, these ETF investors are not used to falling Bitcoin prices. Therefore, this group of exchange-traded fund holders, or “new retail,” could enter a phase of panic selling if they are submerged, although this has not been tested so far.
Currently, the next significant support for the market leader is marked around $82,000, with several spot investors having cost basis. All in all, this valuation makes $79,300 an even more important level to watch if Bitcoin price suffers further declines.
Bitcoin price overview
As of this writing, the price of BTC is around $84,500, reflecting a decline of over 2% in the past 24 hours. The leading cryptocurrency has fallen more than 11% in the past week, according to data from CoinGecko.
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Featured image from iStock, chart from TradingView
