Bitcoin recently had a brief surge towards $88,000, but it quickly fell back below $83,000. What gives?
Short-Term Holders Are Cooling Off
The problem? Short-term Bitcoin holders aren’t buying as much as they used to. This slowdown in buying activity is a red flag, suggesting weakening demand and less confidence in Bitcoin’s short-term prospects. This could lead to more selling, delaying any price recovery.
Data from Alphractal, a crypto analytics platform, shows a significant drop in the amount of Bitcoin held by short-term investors (those holding for less than 3 months, and even less than 6 months). This is based on their analysis of Bitcoin Supply Age Bands, a metric tracking how long Bitcoin has been held.
Will This Affect Bitcoin’s Price?
Historically, high levels of short-term Bitcoin supply have coincided with price increases, while lower levels have often preceded price drops. So, this decrease in short-term holder supply could mean a further price decline.
However, it’s not a guaranteed prediction. Bitcoin has reached new highs even when short-term supply dropped in the past (like in 2021 and 2013). Alphractal suggests that a similar pattern could play out again, potentially leading to new all-time highs within the next six months.
The Bottom Line
While the recent drop in short-term holder buying is concerning, it’s not necessarily a death knell for Bitcoin. Past trends show that Bitcoin can still rise significantly even with reduced short-term interest. Only time will tell if this current dip is a temporary setback or something more significant. As of now, Bitcoin is trading around $82,982, slightly down from the previous day.
