A few days ago, Bitcoin witnessed a brief upward move close to the $88,000 mark due to the renewed bullish momentum across the general crypto market. However, BTC seems to have lost its steam as its price has fallen below $83,000. The sudden increase might be attributed to the recent slowdown in short-term holders’ accumulation.
Short-Term Bitcoin Holders Accumulation Weakens
Bitcoin’s renewed upward momentum has hit a roadblock, causing a sudden pullback to key support levels. Despite the slight upsurge, a worrying trend was observed among the BTC short-term holders, reinforcing the ongoing uncertainty in the market.
Advanced investment and on-chain data platform Alphractal reported that short-term holders have ceased accumulating Bitcoin as the flagship asset’s price continues to experience fluctuations. A slowdown in buying activity among these holders raises concerns about a weakening demand for BTC.
Furthermore, the halt in accumulation signals declining confidence in Bitcoin’s prospects in the short term, which could lead to increased selling pressure. With an increase in selling pressure from these investors, BTC’s price recovery is likely to be delayed.
Alphractal revealed the trend based on an analysis of the Bitcoin Supply Age Bands, a key metric that categorizes BTC supply by age. Data from the metric shows that the supply of short-term holders in a period of 3 months has drastically declined, suggesting a weakening appetite for accumulation or buying activity.
According to Alphractal, examining the supply for up to 6 months can provide a clear understanding of the significance of short-term holders. In the meantime, monitoring this short-term investor conduct daily is important because a persistent decline is not encouraging.
Will The Drop In Supply Influence BTC’s Current Price Action?
Historically, periods of excitement and public attention have been associated with high values of this indicator. Meanwhile, price corrections have been associated with low levels of the metric. Simply put, when the supply increases, BTC’s price tends to rise; when it decreases, the price often follows, raising the possibility of a further decline in the upcoming weeks. Nonetheless, this is not always the case.
As seen in the past, Bitcoin can still hit new highs even in the event of a decline in STH Supply. In 2021, the chart shows that the STH Supply began to fall in April, but in October and November, BTC reached new all-time highs. A similar trend was also observed in the 2013 cycle, where the supply rebounded within a few months, resulting in a move to new highs.
With the supply dropping again, this implies that Bitcoin may still hit new highs in 2025 in spite of the current lack of interest from short-term holders. Thus, Alphractal highlights that the development could cause a surge to new all-time highs for BTC in the next 6 months if a comparable result emerges.
CoinMarketCap data reveals that BTC has moved to $82,982, indicating a 0.16% decrease in the last 24 hours.
Featured image from Unsplash, chart from Tradingview.com
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