According to a recent analysis by Checkmate, Glassnode’s leading on-chain analyst, Bitcoin (BTC) has reached a critical point in its price trajectory.
As the market struggles to maintain its upward momentum and faces downward price predictions, attention is turning to short-term holders (STH) and their potential influence on Bitcoin’s future price movement.
In this article we will delve into the key metrics highlighted by Checkmate’s analysis, shedding light on the current state of the market and the implications for Bitcoin bulls.
The decision point of the Bitcoin (BTC) price
Checkmate states that Bitcoin is currently at a “decision point,” with the actions of short-term holders playing a key role in determining the course of this correction.
Short-term holders are defined as individuals who hold coins for 155 days or less, and their behavior provides valuable insights into market sentiment and potential price movement.
Analysis of the metrics of short-term holders
- STH market value and realized value (STH-MVRV): This metric compares the value of coins moved by short-term holders with their value as a portion of the overall Bitcoin market capitalization. Currently at 1.022, a reading of 1.0 corresponds to a BTC spot price of about $26,500. During bullish markets, this level should act as a psychological support, requiring a quick recovery to justify further upward movement.
- Short-Term Holder Spent Output Profit Ratio (STH-SOPR): The STH-SOPR measures the profitability of spent outputs and indicates the balance of profits and losses among short-term holders. With a ratio currently below 1.0, it suggests “loss dominance” and requires the participation of swooping buyers to potentially trigger a FOMO (Fear of Missing Out) rebound.
- Profit/Loss Ratio Realized by Short-Term Holders: This version of the SOPR takes into account the volume and assesses the profitability of transactions by short-term holders. Although not currently in a bearish phase, a prolonged period below 1.0 could bring the ratio into bearish territory, indicating a potential deeper correction.
- Momentum of the ratio of profits/losses realized by short-term holders: This metric takes into account rapid changes in the regime and market trend in the profitability of short-term holders. With the retreat of momentum from the “green” phase in place since January 2023, it is an early signal that a deeper correction is imminent.
The urgency to act
Checkmate’s analysis highlights the urgent need for action by Bitcoin hodlers, who currently exhibit a sense of dormancy and reluctance to spend their coins.
While Bitcoin bulls aspire to higher prices and a continuation of the upward trend, the passivity of HODLers poses a challenge to achieving these goals.
Hodlers, also known as holders or long-term investors, play a crucial role in the cryptocurrency market.
Their decision to hold Bitcoin or actively engage in buying and selling can significantly influence market dynamics and price movements.
When HODLers actively participate in the market, they generate a sense of confidence and momentum, which can attract additional interest and investment from other participants.
However, the current inactive state of HODLers near historical highs raises concerns about the sustainability of current price levels.
This suggests a lack of conviction or willingness to take risks, which could undermine overall market sentiment.
For Bitcoin to maintain its upward trajectory and establish a solid foundation, more involvement by HODLers is essential.
Greater HODLer engagement can help generate upward momentum in several ways. First, by actively participating in trading activities, HODLers can provide liquidity to the market, facilitating transactions and price discovery. This liquidity increases the overall stability and efficiency of the market, making it more attractive to traders and investors.
Analysis and conclusions on the current price of Bitcoin (BTC)
Bitcoin is facing a crucial moment in its price action, with the actions of short-term holders expected to have a significant impact on the direction of the market.
While chain analysts closely monitor key metrics such as STH-MVRV, STH-SOPR, and profit/loss ratios realized by short-term holders, attention is focused on potential retracements within the broader 2023 bull market.
Bitcoin bulls need to demonstrate their commitment and involvement in the market to sustain and justify continued upward price movements.
As the cryptocurrency market evolves, the decisions made by market participants, both short-term holders and long-term investors, determine Bitcoin’s future trajectory.