Bitcoin has seen substantial gains over the past week, with its price reaching new heights. However, this recent surge in price has been accompanied by a concerning trend: short-term holders (STHs) are aggressively selling off their Bitcoin, slowing down the demand momentum in the market. In the past 24 hours, a massive 26,000 Bitcoin has flooded into exchanges, which has raised some questions about the sustainability of the current rally.

The Impact of Short-Term Holders (STHs)

The recent surge in Bitcoin’s price has been a welcome development for the market, but it has also triggered a wave of profit-taking from short-term holders. These holders, who typically acquire Bitcoin with a short-term view, are now capitalizing on their recent profitability after holding onto their coins during the market downturns. Over the past 10 days, short-term holders have been actively selling their Bitcoin, with the Short-Term Holder Spent Output Profit Ratio (STH SOPR) consistently above 1. This suggests that these holders are profiting from their sales and taking advantage of the market’s upward momentum.

As a result, Bitcoin’s demand momentum has significantly slowed down. According to data from CryptoQuant, the 30-day Demand Momentum indicator for Bitcoin has dropped to -480k BTC. This is a strong indication that short-term holders are offloading more Bitcoin than long-term holders, contributing to an overall decrease in market demand.

The Inflow of Bitcoin into Exchanges

The behavior of short-term holders has been even more pronounced when examining exchange inflows. Data shows that holders with Bitcoin aged between 0 to 30 days have contributed over 26,000 BTC to exchanges in just the past 24 hours. This trend has been consistent over the last week, indicating that short-term holders are dominating the outflows, while long-term holders remain largely inactive.

This aggressive selling is starting to have a noticeable effect on Bitcoin’s price. The Spot Volume Delta metric, which measures the net value of spot trades, has flipped deeply negative over the past three days, standing at -301 million. This is an unusually bearish figure, signaling that the market is now being driven by sellers, particularly those looking to take profits, rather than by buyers who are entering the market with fresh capital.

Profit-Taking and the Risk of a Trend Reversal

With short-term holders increasingly selling off their Bitcoin, a clear shift in market sentiment is beginning to emerge. The Profit-Taker RSI (Relative Strength Index), which tracks the intensity of profit-taking in the market, has spiked to 82. This suggests that the market is witnessing a significant increase in realized profits, contributing to growing sell-side pressure. In contrast, long-term holders are not actively selling their Bitcoin, which indicates that they are holding onto their positions, likely due to their confidence in the long-term value of the cryptocurrency.

This divergence between short-term holders exiting the market and long-term holders holding firm points to potential consolidation for Bitcoin. While long-term holders may be absorbing some of the sell pressure, the overall market is starting to show signs of exhaustion. If this trend continues, it could signal the end of the current bullish rally, with Bitcoin likely to range between $92,000 and $95,000 for the time being.

What Does This Mean for Bitcoin?

Bitcoin is now at a critical crossroads. The continued dominance of short-term holders in the market and their ongoing selling activity could weigh heavily on Bitcoin’s price in the short term. If this selling pressure continues, it could result in a consolidation phase or a potential price pullback, particularly if the selling is not offset by new buying interest from institutional or long-term investors.

To break above the $96,000 mark and continue the upward trend, the selling from short-term holders would need to ease. If the current pace of selling continues, Bitcoin’s price could face difficulties sustaining its rally. In the absence of strong buying pressure, Bitcoin may struggle to break through key resistance levels and could potentially enter a consolidation phase, waiting for the next catalyst to drive momentum.

Conclusion

Bitcoin’s recent rally has been tempered by the heavy selling from short-term holders, slowing down the demand momentum in the market. While long-term holders are holding firm, the aggressive profit-taking behavior of short-term holders and the dominance of exchanges in absorbing these outflows are beginning to weigh on the market. If Bitcoin cannot attract enough new buyers to counteract this selling pressure, its price could range between $92,000 and $95,000 for the near future. The market’s next move will depend on whether the selling from short-term holders subsides, or if a new wave of buying activity emerges to push Bitcoin’s price higher.