After a slight price recovery in the past week, Bitcoin (BTC) has surged above 98,000 with market bulls targeting a return to the $100,000 price zone. Interestingly, the report from CryptoQuant analyst Darkfost found an increase in demand from short-term holders to coincide with this recent rise in prices.
Bitcoin STH appetite increases LTH selling pressure
In a QuickTake post on Friday, Darkfost reports that long-term holders of bitcoin are in a sell-off that is accompanied by increased demand from short-term holders. Based on market conditions, Darkfost explains that the current transfer of funds historically only occurs after the top of the local market or the peak of the bull cycle, indicating potential concern for Bitcoin after the price correction in December.
Analyzing the asset’s next move based on short-term owner activity currently fueling market demand, Darkfost has identified $85,000, which is the STH realized price, as the critical price region.
For context, the realized price of STH represents the average acquisition cost of all BTC held by short-term holders. It often translates into a physiological zone capable of acting as a support or resistance zone.
With Bitcoin still in an uptrend, $85,000 should be considered a vital support level that can sustain the bull market in the event of a retest. Based on data on longer STH procurement periods ranging from 1 week to 6 months, other significant support levels include $81,000 and $60,000.
However, amid BTC’s recent recovery, major resistance awaits at $99,000, which is the realized price for STH that has emerged in 1 week -1 month. This is because as Bitcoin approaches $99,000, these newer entrants will likely sell to recoup their initial investment which could prevent further growth.
SOPR shows no profit for short-term holders
In other developments, Darkfost also notes that the Short Holders’ Spent Output Profit Ratio (SOPR) is currently neutral at 1 following Bitcoin’s pullback from $108,000 in December.
This suggests that short holders are not selling at a profit and are likely to ease the selling pressure. Given that the LTH sell-off also counteracts the growing demand for these STHs, market liquidity is likely to decrease, potentially preventing a full market recovery.
Therefore, Darkfost predicts that BTC will remain in consolidation with the possibility of further price correction.
At the time of writing, Bitcoin is trading at $98,030 after gaining 1.27% in the last 24 hours. Meanwhile, the trading volume of the asset decreased by 15.47% and was estimated at $36.26 billion.
Featured image from CNN, chart from Tradingview
