The price of bitcoin (BTC) is expected to experience heightened volatility following its dip below $75,000 twice in the last week, marking a continued decline from the peak of $109,000 recorded on January 20.
This movement places it within what some analysts refer to as an “air pocket” between $70,000 and $80, a price range established after the cryptocurrency surged in value following the election victory of President Donald Trump in November.
The dominant cryptocurrency rose from about $70,000 to over $100,000 after the election, without returning to its initial price point. Historically, when bitcoin’s price rises rapidly without establishing strong support levels, it tends to revisit those areas for retesting later. This absence of price interaction suggests a low supply, which amplifies the potential for swift movements in price.
One method to illustrate this phenomenon is by examining bitcoin’s unspent transaction outputs (UTXO), which reflect the amount of bitcoin that has been received but remains unspent, thus still available for future transactions.
The UTXO Realized Price Distribution (URPD) displays the price points at which current bitcoin UTXOs last changed hands. In this analysis, the average purchase price for each holder is used to categorize their complete holdings into the relevant price tiers.
For bitcoin to make a sustainable move—whether upwards or downwards—it will likely need to consolidate within this “air pocket” region. As depicted in the accompanying chart, less than 2% of the total supply is situated within this range, indicating that any price actions here could remain quite volatile due to the limited supply.
Currently, approximately 25% of bitcoin’s supply is held at a loss, mainly by short-term holders who acquired their holdings within the last 155 days.