Bitcoin [BTC] recently faced a setback following the latest inflation update, resulting in a noticeable decline in its value. Nevertheless, beneath the surface of this downturn lies an intriguing development.
Despite the recent price reduction, there has been a significant slowdown in the amount of Bitcoin being spent at a loss by short-term holders (STHs).
What implications does this have for the future of Bitcoin’s market? Are we witnessing signs of stability, or is this just another unexpected turn?
Bitcoin and the Inflation Factor
The ripple effect of the February inflation report shook the market, sparking uncertainties about an imminent Federal Reserve rate decrease.
Bitcoin, which was previously hovering above $97,000, momentarily slipped below $95,000 but later found support and bounced back to approximately $96,000.
This decline coincided with a broader sell-off in high-risk assets, including Bitcoin-associated shares such as MicroStrategy (MSTR).
The sharp drop in Bitcoin’s value followed by a moderate recovery indicates initial panic-driven sales before buyers stepped in to stabilize the situation. With the RSI at 44.45, Bitcoin’s position remains in a neutral-to-bearish zone, reflecting caution in the market.
Furthermore, the OBV indicator suggests subdued buying activity, highlighting a sense of prudence prevailing in the market.
Diminished Selling Pressure Points Towards Stability
Despite Bitcoin’s decline, data from on-chain sources indicates a gradual easing of the selling pressure from short-term holders.
The volume of BTC sold at a loss by STHs has decreased from its peak in early February of 5.5K BTC to 3.8K BTC, getting closer to the annual average of 3.5K BTC.
This deceleration in panic-driven sales hints at a market stabilization phase, suggesting that weaker hands may have already departed.
Moreover, long-term holders are predominantly inactive, underscoring their strong belief in the asset. The lack of widespread capitulation among LTHs indicates that the recent decline has not triggered widespread anxiety.
Should this trend persist, Bitcoin could encounter firmer support near current levels, potentially paving the way for a recovery when sentiment turns positive.