When BTC prices drop, short-term holders ("weak hands") tend to panic-sell, often exiting at a loss.

This behavior is visible in increased purple bars on the chart, signaling STH sell-offs during downturns. As these investors exit, it often marks the shift of BTC to stronger hands, potentially stabilizing the market.

The overall STH supply has declined, especially after major sell-offs, suggesting weak hands are gradually exiting. This reduction in selling pressure can create opportunities for accumulation and may signal a price floor. Understanding STH dynamics can be key to spotting market bottoms.

Written by IT Tech