The Significance of Bitcoin Short-Term Holders
Bitcoin short-term holders, also known as short-term holders (STH), are investors who enter the market during a booming bull market with the intention of making quick profits. These investors do not hold their assets for long periods of time. While they may lose ground when the Bitcoin price corrects, their behavior and presence in the market are important for maintaining a healthy bull market.
The Behavior of Bitcoin Short-Term Holders
It is crucial to observe the behavior of Bitcoin short-term holders due to historical correlations to the BTC price. Short-term holders are defined as addresses that hold their BTC for less than 155 days before becoming long-term hodlers (LTH). The increase in the percentage of BTC supply held by short-term holders is inversely proportional to the percentage held by long-term hodlers.
- The long-term chart of supply in the hands of long-term hodlers is inversely proportional to the price of Bitcoin, especially during the peaks of successive cycles.
- When long-term hodlers sell their Bitcoin, it usually leads to higher BTC prices and attracts new investors.
Short-Term Holders and BTC Realized Cap
According to analyst company CryptoQuant, nearly 50% of Bitcoin’s realized capitalization is in the hands of short-term holders. This indicator has seen a significant increase over the past 30 days as short-term holders have been actively purchasing BTC.
This high dominance of capital amount in the market reflects a very bullish sentiment among short-term holders, indicating potential growth in the price of BTC over the coming weeks and months.
Pace of Selling by Long-Term Holders
Despite the enthusiasm and increased purchases by short-term holders, the pace of selling by long-term holders does not suggest a late phase of the cycle. There is still potential for buying by short-term holders and further price increases in the current cycle.
While sporadic corrections are common in the highly leveraged current market, we have not yet entered the late stage of the cycle.
Key Support Level for Bitcoin
Cryptocurrency market analyst @PositiveCrypto has analyzed the behavior of short-term holders and identified a key support level for Bitcoin. The curve has provided support for the Bitcoin price three times during the ongoing bull market. However, if the ongoing correction leads to a drop below this support level, Bitcoin could reach $55,000, which would be a 25% drop from its current all-time high of $73,777.
It is important to note that even such a deep correction would not disrupt the structure of the long-term bull market. Only a loss of this support level and further declines could trigger a medium-term bear market.
Hot Take: Short-Term Holders and Bitcoin’s Bull Market
Short-term holders play a significant role in Bitcoin’s bull market. Their behavior and presence in the market influence BTC prices and attract new investors. While they may experience losses during price corrections, their activity is crucial for maintaining a healthy market. Monitoring short-term holders provides insights into market sentiment and potential price movements.
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