Following last week’s modest price increase, Bitcoin (BTC) rose above 98,000 with market bulls targeting a return to the $100,000 price area. Interestingly, a report from CryptoQuant analyst Darkfost revealed an increase in short-term holder demand that coincided with this recent price rally.
Bitcoin STH Appetite Mops Up LTH Selling Pressure
In a note posted via QuickTake on Friday, Darkfost reports that long-term Bitcoin holders are in a selling phase matched by strong demand from short-term holders. Based on market conditions, Darkfost explains that ongoing asset transfers have historically only occurred after the top of the local market or the peak of the bull cycle indicating potential concern for Bitcoin following the price correction in December.
In analyzing the stock’s next move based on short-term holder activity that is currently driving market demand, Darkfost has identified $85,000, which is STH’s peak price, as a key price point.
In context, the realized price of STH represents the average price of all BTC held by short-term holders. It often translates into a physiological zone that can act as a support or resistance zone.
Since Bitcoin is still at a high level, $85,000 should be considered as an important support level that can support the bull market in the event of a retest. Based on data for STH’s longer recovery periods ranging from 1 week to 6 months, other key support levels include $81,000 and $60,000.
However, during the recent recovery of BTC, the main resistance is expected at $ 99,000 which represents the received value of STH that appeared in 1 week -1 month. This is because as Bitcoin approaches $99,000, these new entrants may sell to get their initial investment which may prevent further growth.
SOPR Does Not Show Interest to Short-Term Holders
In other developments, Darkfost also notes that the short-term holders’ leveraged ratio (SOPR) is currently neutral at 1 after Bitcoin’s recovery from $108,000 in December.
This suggests that short-term holders are not trading at a profit and are likely to reduce their selling pressure. Since the sale of LTH is also accounted for by the increase in demand from these STHs, market capitalization is likely to decrease which may prevent a full market recovery.
Therefore, Darkfost predicts BTC to remain in consolidation with the possibility of further price correction.
At the time of writing, Bitcoin is trading at $98,030 following a 1.27% gain in the last 24 hours. During that time, the trading volume of the commodity decreased by 15.47% and has a value of 36.26 billion dollars.
Featured image from CNN, chart from Tradingview