The Bitcoin price is still recovering from a significant dip to $60,000 in the early days of October. As bullish investors and long-term holders seize this opportunity, new analysis of on-chain data indicates that the selling pressure has substantially eased, driven by the exodus of short-term holders from the market. Interestingly, these short-term holders played a crucial role in the price dip to $60,000, as data reveals a mass exit during the initial decline, which further intensified the downward movement.
Recent on-chain analysis using data from the CryptoQuant platform demonstrates a marked decrease in Bitcoin held by short-term investors since the beginning of October. Although this led to a drop in Bitcoin prices during this period, it isn’t necessarily a negative development for the cryptocurrency’s future. This trend is visible in purple bars in the accompanying charts, with each instance of price drops accentuated by increased sell-offs from short-term holders.
Bitcoin, which concluded September with a price near $65,000, faced a dip as October commenced amidst overall market anxieties. This resulted in a 7.5% reduction in Bitcoin’s value, bottoming out at $60,100. Significantly, the data shows that this decline to the $60,000 mark paralleled a rise in the frequency of these purple bars, underscoring the impact of short-term holders selling off their assets.
As we move forward, the sell-off by short-term holders and the resulting price decrease are fostering greater accumulation by long-term holders. This shift promises to establish a price floor around $60,000 in the forthcoming weeks and months. It also signals a transfer of Bitcoins into stronger hands that prefer holding over selling.
Additionally, the departure of numerous short-term holders has resulted in a more favorable average cost for remaining investors. According to on-chain metrics from a verified CryptoQuant analyst, the average cost for holders of one to three months is now approximately $61,633, while those holding between three to six months have an average cost of around $64,459.
As of now, Bitcoin is trading at $62,130, which places it right between these two key holder groups. Analyst Burak Kesmeci notes that a strong close above the $64,500 threshold would significantly bolster bullish momentum, providing confidence to both short and long-term holders to maintain their positions. Conversely, a drop below $61,600 could trigger additional selling pressure from short-term holders, potentially driving prices back down to the $60,000 level once more.
Bitcoin price chart from Tradingview.com. BTC price drops below $62,000 | Source: BTCUSD on Tradingview.com