Bitcoin (BTC) price action has been sideways for the past 36 hours as BTC failed to break out of the $63,600 and $62,843 range. As you can see from the chart, BTC is currently below the 50-day EMA level, but remains above the 200-day EMA level on the 4-hour chart.
BTC/USDT on 4-hour chart. Source: Trading View
Bollinger Bands (BB) indicate that the price may be slightly oversold because the current price is below the indicator’s simple moving average (middle band line). However, the BB line is currently diverging, which indicates that the price action will experience near-term volatility.
Related: Short-term BTC holders ‘likely to take on more risk’ as realization cap increases by $6 billion
Bitcoin below $61,600 could test STH’s resolve, analyst says.
Bitcoin investors can be categorized into short-term holders (STH) and long-term holders (LTH), and each group can play an important role. Long-term holders are associated with BTC addresses that have held Bitcoin for more than 155 days, while short-term holders are traders who have been holding Bitcoin for less than the aforementioned period.
Cointelegraph recently reported that short-term holders are now ‘likely taking on more risk’ as BTC STH realized prices have surged. This also coincides with when long-term holders are ‘likely’ to take profits at the end of September.
This means immediate price action may be more dependent on current short-term holders. In light of this, Burak Kesmeci, a verified analyst at CryptoQuant, highlights that if BTC falls below $61,600, there may be panic selling in STH.
Average cost for short-term Bitcoin holders. Source: CryptoQuant
Kesmeci explains that the average cost for short-term Bitcoin holders of 1-3 months and 3-6 months is currently $61,633 and $64,459, respectively. As you can see on the chart, the price is currently moving between this specific range, waiting for a change in direction. The analyst claims that a break above $64,500 would potentially give the bulls a boost in the market. But Kesmeci adds:
“Conversely, losing 61.6K, the average cost of a 1-3 month holder, would severely test the patience of a Bitcoin investor.”
A drop below $61,600 could cause short-term holders to take losses and engage in ‘panic selling’. Data from CryptoQuant shows that STH is barely making any money. The STH-NUPL (Net Unrealized Profit/Loss by Cohort) chart is just above zero. This means that the majority of short-term holders are currently not taking profits.
Net unrealized profit/loss by cohort of short-term Bitcoin holders. Source: CryptoQuant
Related: Bitcoin Coinbase Premium Turns Negative as BTC Price Struggles Below $63,000.
In the fourth quarter, Bitcoin made big gains during the bull cycle.
STH may be forced to sell in a choppy Bitcoin market, but historical odds favor holding BTC until the fourth quarter.
Bitcoin proponent Timothy Peterson recently highlighted that Bitcoin is having its worst October start in 10 years. However, Peterson also points out that Bitcoin’s fourth quarter performance was ‘generally positive by a significant amount.’
Bitcoin Q4 has been around since 2015. Source: Twitter
Since 2015, Bitcoin has only had four quarters of negative returns in 2018, 2019, and 2022, which were outright bear markets. Considering the overall market will likely be strong over the long term in 2024, Peterson added:
“We expect to see about a 30-60% return this quarter. “I think I have a 40% chance of making $100,000 by the end of this year.”
Therefore, short-term holders can continue to hold BTC even if it briefly falls below $61,600 in the coming weeks.