Despite the drop in Bitcoin, both long-term and short-term holders remain optimistic.
The broader market perspective suggests that prices are likely to rise due to a significant reduction in the available supply of BTC.
According to CoinMarketCap, Bitcoin [BTC] has dropped 2.42% to $101,308.55 after reaching an all-time high of $109,114.8 on January 20 (just hours before Donald Trump's inauguration).
AMBCrypto's analysis suggests that given the current market sentiment, the decline in BTC may be a pullback, as the asset is preparing for another rebound.
The price momentum of BTC continues
According to Glassnode, the net unrealized profit/loss (LTH-NUPL) of Bitcoin's long-term holders has exceeded the threshold of 0.75—this level has historically been associated with the 'excitement/greed' phase of market cycles.
LTH-NUPL measures the unrealized profits or losses of addresses holding BTC for at least 155 days.
An increase in unrealized profits typically indicates that traders are more likely to sell assets for gains, suggesting that the market may have reached a local top.
Nonetheless, market sentiment remains positive, with short-term holders further driving prices up through continued buying activity.
As of press time, the short-term holder market cap to realized value (STH-MVRV) ratio is 1.16, above the 1-year trend line of 1.1. STH is defined as addresses holding BTC for less than 155 days.
This recovery indicates that short-term holders have realized profits 16% above their cost basis (i.e., the price at which they acquired BTC).
In other words, this group of people holds their assets at a price higher than their purchase price, and also above the breakeven point.
Overall, as buying activity intensifies across the market, this bullish sentiment among both long-term and short-term holders indicates that BTC prices have further upside potential.
Set new high
The derivatives market shows bullish sentiment for BTC, with funding rates hitting a monthly high of 0.0350%, the highest level since December 5, 2024.
High funding rates indicate that long traders regularly pay fees to short traders to maintain their positions, anticipating a price increase.
High funding rates suggest that BTC prices may be on an upward trend, as market participants also share this view.
Hyblock Capital's liquidation heatmap shows that BTC is at a critical moment, targeting two key liquidity levels: an upward target of $106,000 and a downward target of $99,200.
These levels typically act as price magnets, attracting BTC toward them.
Given the current market sentiment, BTC may first drop to the level of $99,200 before rebounding to $106,000, potentially setting a new high in the process.
The outlook for the BTC market remains optimistic
The overall outlook for the BTC market remains optimistic. Research from CryptoQuant shows that exchanges have seen a massive outflow of 1 million BTC over the past three years.
Such capital outflows indicate a decrease in the available supply of BTC for trading, leading to tighter demand and reduced selling pressure.
If these capital outflows continue (indicating more BTC is being moved off exchanges), it could drive the BTC price up, as seen in similar situations in the past.