Can $104K Save Bitcoin from Further STHs driven Meltdown?

Key Points

• Bitcoin’s short-term holders (STHs) are selling at a loss, causing a dip in the cryptocurrency’s value.
• The future bullish trend of Bitcoin depends on the market behavior of these STHs.

Bitcoin’s value experienced a decline after reaching a high of $112k ten days ago. This decline brought the value down to a low of $103k.

This dip has negatively impacted the profitability of short-term holders who purchased Bitcoin at a value above $104k.

Short-term Holders Selling at a Loss

Short-term holders are now selling their Bitcoin at a loss. The STH SOPR (short-term holder spent output profit ratio) of Bitcoin has dropped below 1, while the cryptocurrency’s value remains above $100k. This is perceived as a positive sign.

Currently, the SOPR is at 0.99, implying that recent buyers are closing their positions at a loss. Despite the decrease in profitability, short-term holders continue to sell aggressively.

The Average Dormancy of Bitcoin has dropped significantly to 8.5, indicating that younger coins are being spent more than older ones. This confirms that the selling pressure is primarily coming from short-term holders.

Optimism Despite Selling Pressure

Despite the selling pressure from short-term holders, CryptoQuant analyst Frost remains hopeful. He suggests that the recent drop in STH SOPR indicates that all available short-term profits have been absorbed. This could mean that the selling pressure may be exhausted at this level.

As losses increase, selling becomes unsustainable, making holders more likely to accumulate and hold rather than sell at a loss.

The recent dip in Bitcoin’s value has been largely driven by short-term holders, who fear a further decline. If these holders continue to sell aggressively, Bitcoin’s value may drop even further.

To maintain a bullish trend, the market must restore confidence among short-term holders, as upward trends depend on positive sentiment and unrealized profits.

In order to sustain momentum, Bitcoin must remain above key short-term holder realized price levels. The main support sits at $104.2k, with a lower boundary at $96.9k. At these levels, critical STH price metrics converge.

Since Bitcoin is currently holding above $104.2k, a continued price decline is unlikely, as STHs will be incentivized to hold rather than sell. However, if Bitcoin falls below $104k, it must remain above $96.9k for stability. If these levels are not maintained, we could see a significant drop in Bitcoin’s value.