Since the start of the year, Bitcoin (BTC) has failed to revisit its all-time high of $108,230. This has reduced the profitability of short-term holders (STHs), putting more selling pressure on its price.
As demand declines, the cryptocurrency could see further price drops. Here’s why.
Short-Term Bitcoin Holders Count Their Losses
In a new report, pseudonymous CryptoQuant analyst Crazzyblockk noted a decline in the profitability of BTC investments for short-term holders (those who have held their coins for less than 155 days).
The analyst assessed profitability levels for all age groups of Bitcoin and found that “following the rally to the $108K level and the subsequent failure to reclaim this critical price point, the margin of profitability for short-term holders has diminished substantially.”
BTC Age Group Profitability. Source: CryptoQuant
The coin’s Spent Output Profit Ratio to its STHs confirms the analyst’s position. According to CryptoQuant, the metric has been on a downward trend since January 2.
The Short-Term Holder Spent Output Profit Ratio (STH-SOPR) measures the profitability of short-term holders of a specific crypto asset. It generally offers insights into whether investors who have held a specific asset for less than 155 days are in a profitable position or not.
BTC STH-SOPR. Fonte: CryptoQuant
As its value declines, short-term holders are increasingly selling at a loss rather than a profit. This reflects declining market confidence among recent buyers, suggesting weaker demand for the cryptocurrency.
On how this could impact the price of BTC, Crazzyblockk said:
A decline in profitability for short-term holders often provides a clear signal of weakening market demand and bearish sentiment in the short to medium term. Therefore, under current conditions, this suggests a high probability of price corrections driven by reduced demand and subdued performance.”
Price prediction
BTC is currently trading at $100,943. If selling pressure increases due to short-term holders facing increasing losses, its price could drop to $91,488.
BTC Price Analysis. Source: TradingView
However, if sentiment changes and BTC witnesses a resurgence in new demand, it could rise beyond the $100K level towards its all-time high of $108,230.
The article Bitcoin’s $108K Barrier Holds – Analysis appeared first on BeInCrypto Brasil.
