Bitcoin’s realized price is facing growing pressure, with key metrics indicating potential weakness in its market momentum. As long-term holders reduce their positions and short-term traders take on more risk, the cryptocurrency is showing signs of struggling to maintain upward momentum. These shifts in behavior are raising concerns about possible short-term corrections for Bitcoin’s price.

Long-Term vs. Short-Term Holders: Diverging Strategies

One of the most notable trends in recent weeks has been the diverging strategies of long-term and short-term Bitcoin holders. Long-term holders, those who typically hold their Bitcoin for over a year, have reduced their positions by a significant $6 billion. This reduction reflects a cautious approach, with these holders likely taking profits or moving their assets into safer positions.

In contrast, short-term holders, who typically hold Bitcoin for less than a year, have increased their buying activity by $6 billion. These traders thrive on Bitcoin’s volatility, often trading on price fluctuations for quick profits. This shift suggests that short-term traders are taking more aggressive positions, but it also raises concerns about the sustainability of these moves.

Bitcoin’s Realized Price Faces Resistance

A key metric highlighting Bitcoin’s current struggle is its realized price, which is calculated based on when Bitcoin was last moved, rather than its current value. The 1-day to 1-week UTXO Age Band, which measures the realized price of Bitcoin held between one day and one week, has repeatedly shown signs of resistance. Each time the market price attempts to rise above this level, it faces rejection, indicating weakening momentum.

These repeated rejections suggest that Bitcoin’s realized price is struggling to hold, and further corrections may be on the horizon. Traders are closely watching this level, as it serves as a key indicator of whether Bitcoin’s price will continue to decline or stabilize.

Open Interest and Leverage Indicate Increased Risk

Another important factor contributing to Bitcoin’s current weakness is the rising levels of Open Interest and leverage in the market. Open Interest, which measures the total number of outstanding derivative contracts, has been signaling that corrections are imminent. Over the past four months, whenever Open Interest has moved above the +1 standard deviation level, corrections and liquidations have followed.

On September 24, Open Interest dropped by 8%, a sign that traders are starting to reduce their exposure. Leverage, the amount of borrowed capital used to increase trading positions, has also played a significant role in driving corrections. Since May, the average leverage on Bitcoin’s tops has been 15.7%, meaning traders are taking on higher risk.

High leverage can lead to quick liquidations when the market turns against over-leveraged traders. These liquidations can further drive down Bitcoin’s price, compounding the pressure already present in the market. Currently, leverage levels are entering what analysts refer to as “impulse zones,” where traders aim to maximize profits while minimizing losses, but this strategy can backfire if the market turns bearish.

MVRV Ratio Suggests Uncertainty in the Market

The Market Value to Realized Value (MVRV) ratio, a key on-chain metric that measures whether Bitcoin is overvalued or undervalued, is another indicator pointing to growing uncertainty in the market. The MVRV ratio currently sits at 1.90, and historically, when this ratio dips below its 365-day simple moving average (SMA365), it signals that the market is entering a phase of uncertainty.

The MVRV ratio helps traders understand whether Bitcoin is being traded above or below its realized value. A dip below the SMA365 could suggest that Bitcoin is overvalued, which may lead to a broader market correction. With the MVRV ratio nearing this critical threshold, traders are becoming increasingly cautious.

Conclusion: Is a Correction Imminent?

Bitcoin’s realized price struggles, combined with high leverage and rising Open Interest, suggest that the market is at a critical juncture. While short-term traders are taking aggressive positions, long-term holders are reducing their exposure, signaling growing caution.

The repeated rejections at the realized price level, along with the MVRV ratio hovering near its uncertainty zone, indicate that Bitcoin may face further short-term corrections. As traders navigate these challenging conditions, they will be closely watching key indicators like Open Interest, leverage, and the MVRV ratio for signs of what’s next in Bitcoin’s price trajectory.