Bitcoin Short Holders ‘Seriously Tested’ If BTC Loses $61.6K – Analyst
Bitcoin (BTC) price action has remained sideways over the past 36 hours as BTC failed to distinguish between $63,600 and $62,843. As shown on the chart, BTC is currently below the 50-day EMA level but remains above the 200-day EMA on the 4-hour chart.
BTC/USDT on 4-hour chart. Source: Trading View
Bollinger Bands (BB) suggest that the current price may be slightly oversold, as it remains below the indicator's simple moving average (middle band line). However, the BB lines are currently divergent, indicating that the price action should have short-term volatility.
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Bitcoin's break below $61,600 could test STH's resolve, the analyst said.
Bitcoin investors can be divided into short-term holders (STH) and long-term holders (LTH), and each group can play an important role. Long-term holders are associated with BTC addresses that hold Bitcoin for 155 days or more, while short-term holders are traders who hold for less than the specified period.
Recently, Cointelegraph reported that short-term holders ‘may be risking more at the moment', with BTC STH seeing a significant increase in realized value. This coincided with the profits that long-term holders could ‘get' at the end of September.
This means that immediate price action may be more dependent on short-term holders at the moment. In light of this, Burak Kesmeci, a certified analyst at CryptoQuant, highlights that STHs could be bullish if BTC falls below $61,600.
The average cost of short-term holders of Bitcoin. Source: CryptoQuant
Kesmeci explains that the average value of short-term Bitcoin holders for 1-3 months and 3-6 months was $61,633 and $64,459, respectively. As seen on the chart, the price is currently squeezing between this range and awaiting a directional break. The analyst says that bulls may gain from a higher market strength above $64,500. However, Kesmeci adds,
“Conversely, if the average price of 1-3 month holders disappears by 61.6k, the patience of Bitcoin investors will be seriously tested.”
A drop below $61,600 could facilitate ‘panic selling' at a loss for short-term holders. According to CryptoQuant data, STHs are making less profit. The STH Net-Unrealized Profit/Loss by Cohort (STH-NUPL) chart is just above 0, which means that most short-term holders are currently unprofitable.
Net-Unrealized Profit/Loss of Bitcoin Short-Term Holders by Groups. Source: CryptoQuant
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Bitcoin in Q4 is mainly profitable in a bullish cycle.
While STHs may be forced to sell in a depressed Bitcoin market, historical odds favor holding BTC in Q4.
Bitcoin proponent Timothy Peterson recently highlighted that Bitcoin is experiencing its worst start to October in 10 years. However, Peterson noted that Bitcoin's Q4 performance was ‘typically positive by a significant margin'.
Bitcoin returns from Q4 2015. Source: Twitter
Since 2015, Bitcoin has only shown negative returns in Q4 for 2018, 2019 and 2022, which were bear markets. Considering the overall market by 2024, it's a long-term mess, Peterson adds.
“I expect a 30-60% profit this quarter. I'd say there's a 40% chance of making $100K by the end of the year.”
Therefore, short-term holders may continue to hold even if BTC briefly falls below $61,600 in the next few weeks.
