Bitcoin bulls stand firm as short-term traders prepare for a potential dip

• Short-term holders have increasingly sold their BTC holdings in the last few days.
• However, bullish sentiment remains in the market.

According to pseudonymous CryptoQuant analyst Cryptohell, Bitcoin’s  [BTC] Exchange Reserve metric has spiked due to the king coin trading at a nine-month high, indicating that traders have been cashing in on the recent surge in price to make profits.

BTC’s Exchange Reserve was 2.19 million BTCs as of this writing. This metric is a collective measure of potential coins that sit on cryptocurrency exchanges and are ready to be sold in the market.

A rise indicates higher selling pressure lingers in the market, while a decline suggests traders favor accumulation. 

Source: CryptoQuant

In an uptrend, Cryptohell opined that based on the characteristics of BTC’s Exchange Reserve, “it’s likely that short-term traders are the ones sending Bitcoin to the exchanges.”

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The analyst assessed BTC’s Short-Term Output Profit Ratio (STH-SOPR) metric to determine what short-term traders have been up to.

At 1.05, Cryptohell stated that this metric indicated that short-term holders had control of the market and were involved in significant coin distribution volume.

Further, Cryptohell explained that this investor cohort has taken to selling their holdings due to various factors impacting the current market situation.

These factors include the upcoming FOMC meeting on 22 March, the majority of Muslim traders withdrawing their investments as Ramadan approaches, and traders being content with their profits and planning to leave the market once it reaches $30,000.

On why the $30,000 price mark was important, Cryptohell said:

“The $29k to $32k price range is a resistance that needs to be taken into account. So, it’s understandable that with the current price already at $27k+, traders are preparing to gradually sell their Bitcoin supply. However, the most noticeable factor currently affecting the market is the FOMC meeting…”

Bullish sentiment lingers on-chain

While BTC short-term traders might be involved in coin distribution in anticipation of a price decline, an assessment of BTC’s on-chain performance confirmed that sentiment remained significantly bullish.

Per data from Santiment, BTC’s weighted sentiment was 2.407, at press time. 

Source: Santiment

A positive value of an asset’s weighted sentiment confirms that the market is convinced that the asset’s price will grow further. Moreso, BTC’s MVRV ratio was 40.49%, indicating that many BTC holders continued to hold at a profit. Therefore, many investors have no reason to hold bearish sentiments. 

Read Bitcoin’s [BTC] Price Prediction 2023-2024

Moreso, after last weekend’s price decline caused BTC’s funding rates to turn negative for the first time this year, improved price performance during the week caused it to reclaim its spot in the positive territory.

BTC’s positive funding rates suggested that many traders believed the leading coin’s price would see more growth. 

Source: CryptoQuant

Lastly, Open Interest has also seen a spike in the past few days, lending credence to the fact that BTC investors have remained bullish.

Source: Coinglass