Bitcoin experienced a significant drop from $126k to a cycle low of around $80k, resulting in unrealized losses for short-term holders. Checkonchain data indicated that Short-Term Holder (STH) Unrealized Loss reached a record $110 billion in November.
Source: Checkonchain
However, the situation has improved in the last two weeks, with Bitcoin rallying to $97k and reducing short-term holders’ losses to around $65 billion, alleviating extreme stress among this group.
Bitcoin STHs exit extreme stress
CryptoQuant analyst Darkfost mentioned that Bitcoin short-term holders have now exited the extreme discomfort zone, with average losses for the cohort decreasing to 6.4%.
Source: CryptoQuant
The Short-Term Holder Sell-Side Risk indicator has also decreased significantly, indicating that most of the selling pressure from this group has already taken place.
Source: Checkonchain
Despite the improvements, there is no guarantee of immediate upside, but the reduced selling pressure suggests that incremental demand could lead to price movements more easily.
Why STHs stayed sidelined
Short-term holders have refrained from selling into strength as weaker hands have already exited during previous drawdowns, resulting in reduced loss realization.
Source: Checkonchain
The market has shifted away from forced selling, and the Short-Term Holder SOPR has improved, indicating a stabilization in the market and raising the possibility of continued recovery.
With limited profits available and losses already incurred, short-term holders are more inclined to hold onto their positions.
A glimpse of hope for BTC?
Bitcoin attempted a breakout but faced resistance near $97,939, leading to a slight pullback. The price consolidated around $95k, with $94k serving as immediate support.
Source: TradingView
Currently, Bitcoin is trading at $95,147, showing improved momentum as indicated by the Chande Momentum Oscillator. The price is above its 20-day and 50-day EMAs, with the 100-day EMA near $95,942 being a crucial level to watch for further price movement.
If Bitcoin can sustain its position above the 100-day EMA, it could signal bullish control and lead to a move towards the 200-day EMA at $99,423. On the other hand, failure at the 100-day EMA might push the price back towards the $92,388 support level.
Final Thoughts
- Bitcoin short-term holders have seen a reduction in average losses, signaling an improvement in their situation.
- Bitcoin shows signs of upside momentum, with short-term holders easing selling pressure as they target $99k.
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