- BTC has once again dipped below $60,000, sparking renewed discussions in the crypto world.
- A reversal could be possible if a number of key conditions are met.
Bitcoin [BTC] rose above $60,000 this weekend after a two-week consolidation. However, the momentum was short-lived as BTC returned to $58,580 at the time of writing.
As the momentum faded, AMBCrypto analyzed the factors behind the decline: is this just a temporary dip, or is the trend likely to continue?
Why Did Bitcoin Fall Today? STHs explain
Looking at the daily price chart, it wouldn’t be surprising if many investors decided to lock in their profits after a run of six consecutive green candles.
This is especially relevant after the bearish pullback in late August that saw BTC fall below $55,000.
As a result, after a challenging battle, stakeholders dug in before the momentum stalled.
Source: CryptoQuant
A look at the chart above clearly showed how STHs and LTHs differ in strategy during market cycles. LTHs wait for price drops to accumulate BTC, while STHs typically occur when the price approaches a market top.
As a result, STH supply increases every time BTC approaches a crucial price zone, often followed by a sharp decline.
This pattern illustrates how STHs take advantage of LTH accumulation to drive the price higher, then exit once the top is reached.
To further confirm whether the selling of STHs contributed to Bitcoin’s decline, AMBCrypto examined the index below.
Source: BGeometrics
Not surprisingly, the day after BTC closed close to $60,500, the STH-SOPR rose above 1, indicating that more short-term holders were cashing in their gains.
To make matters worse, whales have also reduced their holdings, increasing selling pressure. This bearish trend could have dampened the short-squeeze opportunity that fueled the initial surge.
Now the next dip could be more attractive, allowing LTHs to take action and counter the pullback.
Finding the next dip
The chart below shows that Bitcoin’s MVRV momentum has waned since the price fell below $66,750 in June. Despite fluctuations, this downward trend has continued without reversal.
Source: Bitcoin Magazine Pro
If the bulls don’t push for an immediate rebound, a break below the support at $58,100 could lead to a decline towards $55,000.
Historically, buying BTC when the z-score enters the green box leads to excessive returns, which leads to LTHs accumulating.
Read Bitcoin’s [BTC] Price forecast 2024–2025
Meanwhile, other macroeconomic factors could trigger a price correction, causing the z-score to reach the market top before entering the accumulation phase.
In short, a turnaround is not guaranteed unless certain conditions are met: profit-taking is replaced by a strong bull rally, either due to a dip to $55,000 or due to a threatened Fed rate cut.