Bitcoin (BTC) has been experiencing increased volatility over the past week, and the fear among short-term investors is palpable. With BTC’s price continuing to struggle, recently dipping to a low of $81,000, the cryptocurrency is in a precarious position. Short-term investors, in particular, are feeling the pressure, as mounting losses have led many to panic and sell their holdings. This behavior has raised concerns about the future of Bitcoin in the short term and what could come next for its price trajectory.

Short-Term Investors in Panic Mode

According to data from CryptoQuant, short-term Bitcoin holders (those who have held their BTC for less than 155 days) have been selling at a loss since February, signaling a lack of confidence in the market. The Short-Term Holder Spent Output Profit Ratio (STH SOPR) is currently below 1, suggesting that most of the on-chain movements are occurring at a loss. This indicates that many short-term investors are liquidating their positions to avoid further losses, further fueling market uncertainty.

The fear and panic within this cohort are evident as they continue to sell during price declines. The Short-Term Holder Market-Value-to-Realized-Value (MVRV) ratio has also dropped to 0.86, showing that short-term holders are underwater on their investments. Historically, when the STH MVRV ratio falls below 1 for extended periods, Bitcoin has seen a continuation of price declines, as weak demand further drags prices down.

Increased Selling Pressure Across the Market

As the selling pressure mounts, Bitcoin’s exchange netflow has shifted to positive territory for the first time in over 12 days. This indicates that more BTC is being sent to exchanges than withdrawn, which suggests that both retail traders and large holders (whales) are becoming more eager to sell their positions. According to IntoTheBlock, the Large Holder Netflow to Exchange Netflow Ratio has turned positive, reflecting a shift in sentiment from whales as well. This increase in exchange inflows is a worrying sign of rising market pessimism, further pressuring Bitcoin’s price.

The trend of rising selling activity from both small investors and whales is concerning for Bitcoin’s price outlook. When both market participants start selling en masse, the combined selling pressure often results in further declines in the price of the cryptocurrency.

What Does This Mean for Bitcoin?

The current state of extreme panic and fear among short-term investors suggests that Bitcoin is in a bearish phase. The combination of increased selling from both retail and institutional players indicates weak demand for BTC at current levels. Historical trends show that when there’s more selling than buying, the price tends to fall further as market participants offload their positions in a bid to minimize losses.

If this bearish sentiment continues, Bitcoin could see further declines in the coming days. The $81,617 support level is the next key area to watch. If this support fails to hold, a deeper decline toward $80,000 or lower is possible. On the other hand, if buyers take advantage of the current dip, the situation could reverse. Should Bitcoin regain the $84,900 mark and hold above it, there could be an attempt to move towards the $87,000 level.

Potential Path Forward for BTC

While short-term sentiment remains bearish, there is always a possibility that the market could stabilize and even recover. For BTC to regain its footing, a shift in sentiment will be crucial. Buyers could view the current dip in the market as an opportunity to accumulate at lower prices, helping to push Bitcoin higher.

However, until there is a clear change in the market dynamics, Bitcoin is likely to remain under pressure. Traders and investors will need to watch for signs of a reversal or further decline in the coming days as the market reacts to both external factors and investor sentiment. If the panic continues to drive the market, Bitcoin could face more challenges in the short term.