Bitcoin was trading at $63,790, marking its highest price for the current month. Despite the typical decline in September, positive macro factors have enabled BTC to maintain its momentum. With the “Uptober” period approaching, bullish signals suggest a potential upward movement.
Interestingly, it is the traders who have held Bitcoin for a period less than 155 days who are likely to influence the short-term price action from here on.
The Increase in Profits for Short-term Bitcoin Holders
Recent data from CryptoQuant reveals that short-term holders of Bitcoin saw an increase in profits following the breach of the $60K mark earlier this week. This group had previously experienced losses.
This positive shift is evident in the short-term Output Profit Ratio (SOPR), which has risen significantly, indicating a move from negative to positive market sentiment. Additionally, the Bitcoin Fear and Greed Index climbed to 54, its highest level in over three weeks.
The profitability of short-term holders is also reflected in the Realized Price — UTXO Age Bands. Traders holding BTC for one to three months have been trading below their average purchase price since August and finally returned to profitability on September 18th as Bitcoin surged past $61,800.
According to Avocado_onchain, a CryptoQuant analyst, the average buy price of short-term holders now acts as a strong support level, signaling a bullish trend in the market.
Potential Risk of Profit-taking
While the widespread profitability among short-term Bitcoin holders indicates a bullish sentiment, it also introduces a potential risk if these traders decide to sell. The coins moved by these holders have reached a weekly high, aligning with the increase in Bitcoin’s price.
This scenario suggests that short-term holders may be looking to secure profits after witnessing gains in the market. However, even if a significant number of short-term traders decide to sell, the current rally has not been significantly affected, which could attract new buyers.
It is crucial for traders to monitor the price levels between $64,000 and $70,000, as data from IntoTheBlock shows that 4.5 million Bitcoin addresses that purchased at these levels are currently trading at a loss.
As Bitcoin approaches this critical zone, it is likely to encounter resistance. Notably, large investors have not made significant moves in response to the recent price surge, with large holder netflow remaining stable over the past two days, thereby reducing the probability of substantial sell-offs.