bitcoin has shown impressive strength above the $34,000 mark despite heavy profit-taking by short-term holders.
Short-term bitcoin holders are selling, while long-term holders remain calm
As analyst James V. Straten explains in a new mail In X, short-term holders are currently participating in one of the strongest profit-taking events in recent years.
“Short-term holders” (STH) here refer to all those bitcoin investors who have held their coins for less than 155 days. This group comprises one of the two main divisions of the btc market, with the other being called “long-term holders” (LTH).
Statistically, the longer an investor keeps their coins idle, the less likely they are to ever sell them. For this reason, STHs are generally the weak hands of the sector, while LTHs are the strong and persistent holders.
Whenever the sector goes through any significant FUD or FOMO, STHs move in and engage in at least some amount of selling. LTHs, on the other hand, usually show little reaction.
Since bitcoin price has enjoyed a strong rally recently that has taken its price above the $34,000 level, STHs would naturally be selling off now. One way to track whether this bitcoin pool is selling their coins can be by tracking the volume they transfer to exchanges.
In the context of the current discussion, Straten has decided to choose the version of this indicator that specifically tracks the trades of profit-taking investors, since profit-taking is generally the behavior that is the focus of attention during rallies. On the contrary, losing trades play a larger role in price declines.
Now, here is a chart showing the trend in the bitcoin STH metric over the last two years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Remains-Solid-Above-34000-Despite-High-Profit-Taking-by.jpeg" alt="Profit Taking for Short-Term bitcoin Holders” width=”1800″ height=”1013″ loading=”lazy”/>
Looks like the value of the metric has been quite high in recent days | Source: @jimmyvs24 on X
As shown in the chart above, profiting bitcoin STHs have sent large amounts to these centralized platforms since the asset’s last rally.
This confirms that these weak hands have been selling recently. As mentioned above, it is not unusual for something like this to happen, but the scale of the profit-taking this time is particularly significant.
From the chart, you can see that there have only been a few occasions in recent years where profitable STHs have transferred comparable or greater volumes to exchanges. Given this sell-off, it is impressive that bitcoin has been able to stay above the $34,000 level over the past few days.
As expected of LTHs, they have not sold much despite the rally.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/1698708249_427_Bitcoin-Remains-Solid-Above-34000-Despite-High-Profit-Taking-by.jpeg" alt="Long-term bitcoin holders” width=”1800″ height=”1013″ loading=”lazy”/>
The metric has seen a small spike recently | Source: @jimmyvs24 on X
The metric is currently at its sixth highest value for this year, but as is clear from the chart above, the scale of this sell-off is still not that large in pure terms.
btc Price
At the time of writing, bitcoin is trading at around $34,700, up 13% from last week.
<img decoding="async" loading="lazy" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Remains-Solid-Above-34000-Despite-High-Profit-Taking-by" alt="bitcoin price chart” width=”1534″ height=”869″/>
btc has slowed down a bit since its sharp rally | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, TradingView.com charts, Glassnode.com
