Bitcoin has been facing challenges in maintaining its recent surge above $108,000. Currently, it is fluctuating within a range of $92,000 to $97,000.
As of the latest update, Bitcoin is priced at $93,905, marking a 2.18% decrease in daily trading. Furthermore, the cryptocurrency has witnessed a 12.37% decline over the week.
This decline has resulted in short-term investors, especially those who entered the market in November, facing losses. The increasing loss margins among short-term investors have triggered speculations on the future market direction.
Comparison of Bitcoin’s Long-Term and Short-Term Holders Position Changes
According to Cryptoquant, there has been a negative 30-day net position change of -750,000 BTC for long-term holders (LTH).
Despite this shift, Bitcoin’s price has managed to remain resilient without a significant drop. This is attributed to continued accumulation by short-term holders (STH) even during Bitcoin’s all-time high rallies.
On the other hand, the net position change for short-term holders (STH) has increased to a positive value of +750,000 BTC.
Although short-term investors continued accumulating during Bitcoin’s price surges, the STH Spent Output Profit Ratio (SOPR) turned negative, indicating their operations are incurring losses.
With short-term holders facing losses, they are at a crossroads: either hold and wait for a price recovery or purchase more at lower prices. The course taken by STH, along with LTH demand trends, will influence Bitcoin’s momentum.
If short-term holders opt to sell at a loss, it could intensify selling pressure and drive prices lower. The decisions made by short-term holders will significantly impact Bitcoin’s price trends.
An analysis of spent age bands reveals active selling by short-term holders. In the past week, STHs have sold more coins compared to LTH, with 56 million coins spent within a day and 9 million held for a week.
Consequently, there has been a notable increase in the exchange supply ratio over the last week. A rise in exchange supply indicates a movement of spent coins to exchanges, suggesting traders are depositing more Bitcoin tokens for potential selling activities.
This trend suggests heightened speculative trading among STH traders, with some resorting to selling at a loss in anticipation of acquiring Bitcoin at lower rates.
Bitcoin’s Future Implications
Observations indicate that the market is predominantly influenced by short-term holders. Consequently, Bitcoin is vulnerable to increased selling pressure from this segment, potentially leading to price dips.
Given the active selling by STHs, their lack of confidence in the market is evident, prompting them to seek lower buying opportunities post-selling at a loss. Any shift in their net position towards negativity akin to long-term holders could forecast further price drops for Bitcoin.
Hence, if the prevailing bearish sentiment persists, Bitcoin might retrace to $92,130. Conversely, sustained demand from short-term holders could propel Bitcoin’s recovery towards $95,800.