The ongoing price decline of Bitcoin (BTC) may intensify if it dips below the $80K mark, as on-chain evaluations suggest that the $10K range beneath this threshold was characterized by sluggish economic activity towards the end of last year.
Following Donald Trump’s election victory, BTC prices surged from $70K to over $80K in early November. Consequently, there was minimal BTC trading within this range, resulting in what is termed a “supply gap,” which is illustrated in the UTXO Realized Price Distribution (URPD) chart.
This specific metric monitors the price levels at which existing bitcoin UTXOs were last transferred. Each bar indicates the volume of bitcoin that exchanged hands within certain price brackets. Notably, the data is adjusted for entities, meaning it averages the purchase price for each entity and classifies its entire balance accordingly.
Bitcoin’s swift rise from the mid-$60K to over $100K following Trump’s win left scant supply accumulation in the $70K to $80K region, as trading only occurred for a few days within those parameters.
In essence, there are likely far fewer traders whose acquisition prices lie between $70K and $80K compared to other price levels. Thus, a downturn below $80K will likely see limited buying interest from holders wanting to purchase more at their acquisition prices, resulting in little support until the $73K mark, which represents the all-time high set in March 2024.
Additionally, as bitcoin currently consolidates above $80K, roughly 20% of the total supply is at a loss, meaning these assets were acquired above the existing price of $83K. These accounts could exert additional selling pressure should the price drop below $80K, potentially leading to a sharp decline.
According to data, approximately 100,000 BTC have been offloaded by short-term holders in response to the recent price correction. The existing lack of supply, combined with lukewarm demand, has already contributed to bitcoin’s 30% drop from its peak of $108K.