- The rally in BTC’s price has attracted many new short-term holders.
- Their habit of making profits can result in a price correction.
Bitcoin’s Recent Rise [BTC] value has led to a rise in the number of short-term investors holding the leading coin, pseudonymous CryptoQuant analyst MAC_D noted in a new report. report.
The analyst assessed the coin’s Unspent Transaction Output (UTXO) for the different age categories the coin is in.
They found that the percentage of investors holding BTC between a day and a week has skyrocketed.
According to CryptoQuant data, this is up 49% since January 24.
According to MAC_D, this increase reflected similar trends observed in October 2020, which marked the beginning of the last major bull run in the cryptocurrency market.
Source: CryptoQuant
What to pay attention to
It is banal to note that investors who use BTC between a day and a week are usually short-term holders (STHs), and their recent inflows into the market come with certain risks.
This is because they tend to be more price sensitive than long-term holders (LTHs), as their coins are easily accessible and ready to distribute once the price of BTC falls below their cost basis.
According to MAC_D, this continued influx will lead to:
“The inflow of new capital, rising prices and overheating will be the standard for futures and on-chain data in the future.”
A review of BTC’s Chaikin Money Flow (CMF) confirmed the steady inflow of liquidity into the market. BTC’s CMF at the time of writing was 0.29, showing that buying activity was outpacing coin sell-offs.
Source: TradingView
Also regarding the Futures market of the coin, AMBCrypto reported rather that BTC Open Interest recently rose to an all-time high.
Normally, BTC witnesses a price correction when the Open Interest rises to new highs as traders close their positions to make profits.
Read Bitcoin’s [BTC] Price forecast 2024-2025
While LTHs often take a more resilient approach, STHs are ‘paper hands’ and quick to sell at any sign of trouble.
As noted by the analyst, “A 20-30% correction can occur at any time due to overheating.” However, this can be followed by a significant increase in the value of the coin.
“Of course, a 20-30% correction could occur at any time due to overheating, but Bitcoin’s price is likely to rise to almost $120,000 after the correction, so it is important to be optimistic if a temporary correction occurs in rather than considering a disadvantage due to overheating.”