Short-term Bitcoin holders exit the market: What happens now?

• Short-term Bitcoin holders started to sell at unprecedented rates as long-term holders accumulated. 
• The shift in capital comes as traders chose to remain risk-averse. 

Bitcoin [BTC] was trading at $58,200 at the time of writing after a 2.8% gain. The price increase followed the release of U.S. inflation data as traders bought into the narrative of the Federal Reserve trimming rates next week. 

However, despite these gains, Bitcoin was still facing challenges. CryptoQuant author IT Tech noted that short-term holders were exiting the market. 

In the last two weeks, this cohort has decreased its net position on Bitcoin through profit-taking and loss-taking.

Within the same period, long-term Bitcoin holders have accumulated more coins, showing a significant shift in capital. 

Source: CryptoQuant

Short-term Bitcoin holders have a more immediate impact on price and by selling, they contribute to choppy price moves. 

However, the accumulation by long-term holders could result in price stabilization and set the stage for a rebound. 

Bitcoin holders exit   

The weak demand for Bitcoin is also reflected in its decoupling from gold, given that the latter recently reached an all-time high. 

The head of research at CryptoQuant, Julio Moreno, noted that a sustained period of negative correlation between Bitcoin and gold suggests a risk-averse environment.

It showed that traders were willing to hold less volatile assets such as gold. 

Moreover, Bitcoin was underperforming alongside a weak U.S. dollar. This also showed risk aversion and uncertainty across global markets, which lowered demand for digital assets. 

Short-term Bitcoin holders were also selling at a loss, as seen in the Spent Output Profit Ratio (SOPR), which has been below 1 since the 27th of August. 

Source: CryptoQuant

Thus. traders who have held BTC for 155 days or less seemed willing to forego profits and exit their positions due to the fear that prices could drop further. It also showed the strength of the bearish sentiment. 

Price outlook 

The short-term and long-term sentiment toward Bitcoin remained bearish, as the price trailed below the 50-day and the 100-day Simple Moving Averages (SMAs). 

The 50-day SMA, which was at $60,000 at press time, was the immediate resistance for BTC. If the price reaches this level, the near-term sentiment will flip bullish.

However, for a more sustained rally, Bitcoin needs to reclaim $63,000.

Source: TradingView

The Moving Average Convergence Divergence (MACD) indicator also showed slight bullish momentum. The MACD line has crossed above the signal line, while the MACD histogram bars have turned green. 

Read Bitcoin’s [BTC] Price Prediction 2024–2025

This trend suggested that bulls might be gearing up. However, a continuation of this uptrend will happen if the MACD line flips positive. 

Despite the recent gains, the Bitcoin Fear and Greed Index at 31 shows the market is fearful. This could see demand continue to weaken.