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Bitcoin is at risk of a correction, thanks to this cohort

March 4, 2024
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  • The rally in BTC’s price has attracted many new short-term holders.
  • Their profit-taking habit may result in a price correction. 

The recent hike in Bitcoin’s [BTC] value has led to an uptick in the number of short-term investors holding the leading coin, pseudonymous CryptoQuant analyst MAC_D noted in a new report. 

The analyst assessed the coin’s Unspent Transaction Output (UTXO) for the different age bands that hold the coin.

They found that there has been a surge in the percentage of investors that have held BTC between a day and a week. 

Per CryptoQuant’s data, this has risen by 49% since 24th January.

According to MAC_D, this increase mirrored similar trends observed in October 2020, which marked the beginning of the last major bull run in the cryptocurrency market. 

Bitcoin Realized Price

Source: CryptoQuant

What you need to look out for

It is trite to note that investors who BTC between a day and a week are mostly short-term holders (STHs), and their recent influx into the market poses certain risks. 

This is because they are typically more price-sensitive than long-term holders (LTHs), as they have their coins easily accessible and ready to distribute once BTC’s price falls below their cost basis. 

According to MAC_D, this continued influx will lead to,

“Inflows of new capital and rising prices, and overheating will be the default for futures and on-chain data going forward.”

An assessment of BTC’s Chaikin Money Flow (CMF) confirmed the steady liquidity inflow into the market. BTC’s CMF was 0.29 at press time, showing that buying activity exceeded coin sell-offs.

btc/usdt 1-day chart

Source: TradingView

Also, regarding the coin’s Futures market, AMBCrypto reported earlier that BTC’s Open Interest recently climbed to an all-time high. 

See also  Bitcoin: Trump or Biden? Who can push BTC to $150K?

Typically, BTC witnesses a price correction when its Open Interest rallies to new highs as traders close their positions to take a profit.


Read Bitcoin’s [BTC] Price Prediction 2024-2025


While LTHs often adopt a more resilient approach, STHs are “paper-handed” and quick to sell at any sign of trouble.

As noted by the analyst, “a 20-30% correction can happen at any time due to overheating.” However, this may be followed by a significant rally in the coin’s value. 

“Of course, a 20-30% correction can happen at any time due to overheating, but the price of Bitcoin is likely to rise to near $120K after the correction, so it’s important to be bullish when a temporary correction occurs rather than considering a downside bet due to overheating.”

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  • The rally in BTC’s price has attracted many new short-term holders.
  • Their profit-taking habit may result in a price correction. 

The recent hike in Bitcoin’s [BTC] value has led to an uptick in the number of short-term investors holding the leading coin, pseudonymous CryptoQuant analyst MAC_D noted in a new report. 

The analyst assessed the coin’s Unspent Transaction Output (UTXO) for the different age bands that hold the coin.

They found that there has been a surge in the percentage of investors that have held BTC between a day and a week. 

Per CryptoQuant’s data, this has risen by 49% since 24th January.

See also  Trump Family Backed American Bitcoin To Go Public via Merger With Gryphon Digital

According to MAC_D, this increase mirrored similar trends observed in October 2020, which marked the beginning of the last major bull run in the cryptocurrency market. 

Bitcoin Realized Price

Source: CryptoQuant

What you need to look out for

It is trite to note that investors who BTC between a day and a week are mostly short-term holders (STHs), and their recent influx into the market poses certain risks. 

This is because they are typically more price-sensitive than long-term holders (LTHs), as they have their coins easily accessible and ready to distribute once BTC’s price falls below their cost basis. 

According to MAC_D, this continued influx will lead to,

“Inflows of new capital and rising prices, and overheating will be the default for futures and on-chain data going forward.”

An assessment of BTC’s Chaikin Money Flow (CMF) confirmed the steady liquidity inflow into the market. BTC’s CMF was 0.29 at press time, showing that buying activity exceeded coin sell-offs.

btc/usdt 1-day chart

Source: TradingView

Also, regarding the coin’s Futures market, AMBCrypto reported earlier that BTC’s Open Interest recently climbed to an all-time high. 

Typically, BTC witnesses a price correction when its Open Interest rallies to new highs as traders close their positions to take a profit.


Read Bitcoin’s [BTC] Price Prediction 2024-2025


While LTHs often adopt a more resilient approach, STHs are “paper-handed” and quick to sell at any sign of trouble.

As noted by the analyst, “a 20-30% correction can happen at any time due to overheating.” However, this may be followed by a significant rally in the coin’s value. 

“Of course, a 20-30% correction can happen at any time due to overheating, but the price of Bitcoin is likely to rise to near $120K after the correction, so it’s important to be bullish when a temporary correction occurs rather than considering a downside bet due to overheating.”

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