Essential insights:
Bitcoin surpasses the $120,000 milestone as the selling pressure from long-term holders diminishes.
Short-term holders are experiencing losses, indicating potential market stabilization.
Neutral LTH flows may pave the way for a significant breakout.
Bitcoin (BTC) surged past $120,000 for the first time since August 13, driven by on-chain data suggesting a shift toward an accumulation phase as selling pressure from long-term holders (LTHs) reduces.
According to Glassnode, the Short-Term Holder Realized Value (RVT) ratio has been consistently decreasing since May, reflecting a decrease in speculative excess. Historically, high RVT levels corresponded with overheated markets, while contractions towards the “full market detox” area indicated that short-term traders were earning fewer profits compared to overall network activity. If this trend continues, it might set the stage for renewed accumulation as investors brace for clearer market direction.
On the supply front, the balance between long-term holders and institutional inflows is crucial. After a prolonged period of consistent distribution, data indicates that the Long-Term Holders Net Position Change (3D) metric has shifted towards neutral territory.
This suggests the significant profit-taking that limited recent rallies may be easing, potentially allowing exchange-traded funds (ETFs) and new inflows to become the primary factors driving near-term momentum.
If this cooling supply trend persists, Bitcoin could be establishing a structural base in the $115,000 to $120,000 range, similar to the consolidation phase witnessed in March and April, when neutralized LTH flows preceded a sharp upward trend.
With LTH distribution declining and short-term excess unwinding, analysis indicates the market may be gearing up for a crucial breakout attempt, with $120,000 identified as the key level to monitor.
Related: Bitcoin’s upcoming ‘explosive’ move aims for $145K BTC price: Analysis
Short-term holder losses indicate absorption signs
While long-term supply dynamics seem to be cooling, short-term investor behavior is also showing significant signals. According to CryptoQuant, short-term holders (STHs) recently experienced a period of challenge, with the STH-SOPR dropping as low as 0.992 in September. This indicated a phase where speculative wallets consistently realized losses, often a sign of weak hands exiting the market.
However, last week, the metric saw a slight recovery to 0.995, still below August’s 0.998, but indicating early signs of stabilization.
Historically, such resets typically lead to two outcomes: prolonged loss realization that drives corrective phases or a “healthy reset” where selling pressure is swiftly absorbed. With BTC firmly consolidating above $115,000, the recovery in STH-SOPR could signify potential market resilience leading into a new bullish leg.
Related: Bitcoin bulls aim for $120K as traders anticipate new all-time highs
This article does not provide investment advice or recommendations. Every investment and trading move carries risk, and readers should conduct their own research before making decisions.
