As of the time of writing, Bitcoin [BTC] was priced at $58,200, reflecting a 2.8% increase. This rise came on the heels of the release of U.S. inflation data, prompting traders to speculate on a potential rate cut by the Federal Reserve in the upcoming week.
Despite the uptick in price, Bitcoin was still encountering hurdles. According to IT Tech, an author at CryptoQuant, short-term holders were seen withdrawing from the market.
Over the past fortnight, this group has reduced their overall Bitcoin holdings, driven by both profit-taking and loss-cutting strategies.
During the same timeframe, long-term Bitcoin holders have been accumulating more coins, signaling a noteworthy shift in asset distribution.
The actions of short-term Bitcoin holders tend to have an immediate impact on pricing dynamics, with their selling contributing to volatile price fluctuations.
Conversely, the accumulation by long-term holders could lay the groundwork for price stabilization, potentially paving the way for a market recovery.
The Exodus of Bitcoin Holders
The softening demand for Bitcoin is evident in its divergence from gold, especially as the latter recently achieved a record high.
Julio Moreno, head of research at CryptoQuant, highlighted that a sustained period of negative correlation between Bitcoin and gold signals a risk-averse market sentiment.
This trend indicates that traders are gravitating towards less volatile assets like gold during uncertain times.
Furthermore, Bitcoin’s underperformance amidst a weakened U.S. dollar underscores risk aversion and market uncertainty, dampening the appetite for digital assets.
In addition, short-term Bitcoin holders have been selling at a loss as indicated by the Spent Output Profit Ratio (SOPR), which has remained below 1 since August 27.
It appears that traders who have held Bitcoin for 155 days or less are opting to liquidate their holdings, possibly driven by fears of further price declines and prevailing bearish sentiment.
Price Projection
Sentiment surrounding Bitcoin, both short-term and long-term, continues to lean bearish, with the price trailing below the 50-day and 100-day Simple Moving Averages (SMAs).
The 50-day SMA currently stands at $60,000 and represents a crucial resistance level for BTC. A breach of this level could shift near-term sentiment to bullish.
For a sustained upward momentum, Bitcoin must reclaim the $63,000 mark.
Additionally, the Moving Average Convergence Divergence (MACD) indicator suggests a minor bullish momentum. The MACD line has crossed above the signal line, while the MACD histogram bars have transitioned to green.
While this trend hints at a potential uptick, a definitive continuation of the uptrend would materialize if the MACD line turns positive.
Despite recent gains, the Bitcoin Fear and Greed Index registering 31 points reflects a market sentiment tinged with fear, indicating a potential further weakening in demand.