Recently, Bitcoin gained bullish momentum within the wider crypto market, leading to a brief rise near the $88,000 level. However, it seems BTC has lost its momentum, with prices dropping below $83,000. This spike may be linked to a recent pause in the accumulation by short-term holders.
Short-term Bitcoin holder accumulation declines
Bitcoin’s new upward momentum encounters hurdles and swiftly retreats to the primary support level. Although there was a minor increase, a concerning trend has been noted among BTC short-term holders, indicating the prevailing uncertainty in the market.
According to Alphractal, a platform specializing in advanced investment insights and on-chain data, it has been observed that short-term holders have ceased their Bitcoin accumulation in light of ongoing price volatility. This slowdown in buying activity raises alarms regarding a potential drop in BTC demand.
Additionally, a cessation in accumulation could undermine confidence in Bitcoin’s short-term outlook, leading to heightened selling pressure. This increased selling activity could lead to a delay in BTC’s price recovery.
Alphractal has identified trends based on an analysis of Bitcoin Supply Age Band, a crucial metric categorizing BTC supply according to age. Information derived from this metric indicates that the supply from short-term holders has largely diminished over a three-month span, pointing to a decreased interest in accumulation and buying activity.
Alphractal recommends examining supply over an extended period of six months to better grasp the significance of short-term holders. It remains vital to observe the daily behaviors of these short-term investors, as ongoing declines require prompt attention.
Will reduced supply impact BTC’s current price trends?
Historically, periods of high enthusiasm and public focus have correlated with the elevated value of this indicator. Meanwhile, price corrections tend to align with low metric levels. In simple terms, as supply rises, BTC prices usually increase; conversely, a decrease in supply may lead to price drops, increasing the chances of additional declines in the following weeks. However, this is not an absolute certainty.
Historically, Bitcoin has reached new peaks, even with declining STH supply. For instance, in 2021, the records show that STH supply started to diminish in April, yet by October and November, BTC achieved an all-time high. A similar pattern emerged in the 2013 cycle, where recovery in supply within months led to price surges.
Should the supply decline again, it may suggest that Bitcoin could attain new heights in 2025, despite the current disinterest from short-term holders. As such, Alphractal emphasizes that if similar trends manifest, the situation may trigger a new, continually growing surge in BTC over the next six months.
Data from CoinMarketCap shows that BTC has adjusted to $82,982, reflecting a 0.16% decrease in value over the past 24 hours.
Unsplash provided the featured images and charts on tradingView.com
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