A cost basis cluster represents a grouping of Bitcoin or other digital assets acquired by a specific set of addresses within a narrow price range. This on-chain analytical tool helps identify significant price levels where a substantial amount of supply entered the market. It indicates the average acquisition price for a segment of holders. These clusters can act as areas of support or resistance.
Context
Analyzing cost basis clusters offers valuable insight into the psychological and economic positioning of market participants. When the current price approaches a large cluster, it often suggests a potential area where holders might defend their positions or exit at breakeven. News related to Bitcoin price movements frequently references these on-chain metrics to explain market behavior.
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