- Short-term holders have seen their unrealized gains grow, hitting new highs while reaching a new support level
- BTC has continued to follow its historical patterns from the last two bull cycles
After reaching a new peak above $108,000 in December, Bitcoin has struggled to maintain any momentum on the charts as selling pressure increased. In fact, at the time of writing, the cryptocurrency was valued at just under $94,000.
However, market reactions, especially from short-term holders, combined with historical trends seemed to indicate that the asset has strong potential to move higher.
The increase in profits for short-term holders provides new support
At the time of writing, data from Glassnode showed that there appeared to be a notable increase in the unrealized gains of short-term holders (STH) of Bitcoin (BTC). Here, sHort-term holders are defined as addresses that have held BTC for no more than 155 days, or approximately five months.
Normally short-term holders sell for a profit, but in this case they have chosen to hold, pushing the total profit to over 7.9%. This profit is determined by comparing the market value with the realized value (MVRV) of this cohort.
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When unrealized gains rise, it usually means that short-term holders refrain from selling and prefer to hold their BTC. This behavior is considered a bullish signal.
Should this trend continue, the average price at which short-term holders acquired their BTC – around $86,600, as indicated in the chart – will likely serve as a new support level for the price to move higher as of the time of writing.
In other words, if Bitcoin falls, this total cost base would act as a significant support level. This would prevent further price declines, potentially fueling continued upward momentum.
Historical data shows that BTC could move higher
According to analyst James Van Straten, Bitcoin’s continued 15% price decline follows historical market cycles, which have previously seen similar, slight declines.
His analysis also noted that there is potential for a further rally in BTC, although further declines could occur in January.
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However, several major events could still have a significant impact on Bitcoin’s market trajectory, including Donald Trump’s upcoming presidential inauguration on January 20.
Others, like analyst TonytheBullBTC, found that BTC is following a historical pattern, similar to one previously seen in January last year: a trend that led to a rally to a new high.
According to him,
“The [current] The corrective behavior in Bitcoin remains similar [to that of January]albeit at twice the speed.”
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The two-day time chart on the left illustrates how BTC entered a corrective phase before the subsequent rally, which led to a new high of $73,777 earlier in 2024.
On the right, BTC seemed to follow the same pattern, as shown by the daily chart. If this pattern fully materializes by January 2025, BTC could hit a new all-time high as suggested by broader market outlooks.
Overall, BTC remains bullish, with short-term bonds and historical data playing a crucial role in the potential price movements.