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The price of bitcoin still recovering from a major fall to $60,000 in the first three days of October. Like the bulls and long-term holders continue capitalizing On the decline, analysis of on-chain data has revealed that selling pressure has greatly eased as the majority of short-term holders have exited the market. Interestingly, these short-term holders are responsible for the drop to $60,000, as data shows that many of them left the market during the initial drop, further exacerbating the price drop.
Short-term holders exit the market
According to a cohort analysis of bitcoin holders using data from the CryptoQuant platform, the supply of bitcoin held by short-term holders has decreased substantially since the beginning of the month. Although this contributed to a drop in the price of bitcoin during this period, it is not necessarily bad for cryptocurrencies moving forward. This notable drop is visible in the purple bars in the chat below, with each period of price decline highlighted by an increase in liquidations by short-term holders.
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The price of bitcoin, which ended September around $65,000, began October with a price drop amid broader market tensions. This, in turn, caused the price of bitcoin to drop by 7.5% to bottom at $60,100. Notably, the chart highlights that this most recent drop to the $60,000 level coincided with the appearance of more purple bars, revealing that liquidation by short-term holders played a major role in the price decline.
What does this mean for bitcoin?
Going forward, liquidation by short-term holders and falling prices have led to further accumulation by long-term holders. This, in turn, results in the creation of a price floor of around $60,000 in the coming weeks and months. It also marks the passage of more bitcoins into stronger hands. bitcoin-news-fewer-people-willing-to-sell-btc/” rel=”nofollow”>Who would rather retain than sell?.
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In particular, the exit of many short-term holders has led to a better average cost for the cohort. According to on-chain metrics revealed by a verified CryptoQuant analyst, the average cost of one to three month holders is now around $61,633, and the average cost of three to six month holders is around $64,459.
At the time of writing, bitcoin is trading at $62,130, which puts it right in the middle of these two cohorts of key holders. According x.com/burak_kesmeci/status/1843729980536267033″ rel=”nofollow”>analyst Burak Kesmeci, A decisive close above the $64,500 level would significantly strengthen the bullish momentum, giving short-term and long-term holders more confidence to continue holding. On the other hand, if bitcoin falls below $61,600, it could trigger a wave of additional selling pressure from more short-term holders, which could lead to further price declines to reach $60,000 again.
Featured image created with Dall.E, chart from Tradingview.com
