An onchain indicator suggests that most bitcoin investors are currently under pressure, with 63% of all wealth invested in the largest cryptocurrency having a cost basis above $88,000, according to data from Checkonchain.
This means that the majority of the capital entered the market at a higher price than BTC is trading today. Invested wealth refers to the total value of capital invested in bitcoin when the coins last moved on chain. It is different from the cost basis, which is the average price at which the bitcoin in question was acquired.
This insight comes from a measure called the UTXO Realized Price Distribution (URPD). The URPD illustrates the price levels at which the existing supply of bitcoin last moved on the chain. Each bar represents the amount of bitcoin whose most recent transaction took place within a certain price range.
Bitcoin price has been capped 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 owners are already selling at the fastest pace in six months.
To add to 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.
Looking ahead to February, bitcoin is on track to end January little changed, without the typical relief surge after seeing three straight months of decline. Historically, February has been a strong month with an average increase of around 13% according to Coinglass data. Whether history repeats itself may depend on how the market absorbs the current subsea supply overhang.
