Glassnode explains why Bitcoin’s current position is sensitive.

According to Glassnode, a data analytics firm, the current price of Bitcoin is where a significant number of coins were acquired. This means that the acquisition price of 4.6% of the entire circulating Bitcoin supply is around the current spot prices of the asset.

The cost basis of investors’ coins is distributed through an indicator called “entity-adjusted UTXO Realized Price Distribution (URPD)”. This shows at which price how many coins were acquired by the holders and has been adjusted for entities to remove any internal movements between wallets owned by a single investor.

The chart provided by Glassnode shows that the levels around the current spot price of Bitcoin seem to be the largest center of cost basis in the market right now. A total of 780,000 tokens were purchased at these prices, which amounts to around 4.6% of the entire circulating supply of the cryptocurrency.

Historically, major cost basis centers have played a notable role in the market because they act as important psychological levels. During bearish trends, investors prefer to sell when the prices fall to their cost basis, as they want to avoid getting into a loss. Similarly, holders prefer to buy more at their cost basis during bullish trends, considering it a profitable buying opportunity.

It remains to be seen how the market will respond to the current situation in the coming days. At the time of writing, Bitcoin is trading around $26,000, down 5% in the last week.