- The rise in BTC price has attracted many new short-term holders.
- Your profit-taking habits may lead to a price correction.
The recent rise in Bitcoins [BTC] Value has led to a surge in the number of short-term investors holding the leading coin, pseudonymous CryptoQuant analyst MAC_D noted in a new report report.
The analyst evaluated the coin's Unspent Transaction Output (UTXO) for the different age groups in which the coin is held.
They found that the percentage of investors who held BTC between a day and a week increased.
According to CryptoQuant data, this value has increased by 49% since January 24th.
According to MAC_D, this increase reflected similar trends observed in October 2020, which marked the start of the last major bull run in the cryptocurrency market.
Source: CryptoQuant
What you need to pay attention to
It is trite to note that investors who transact BTC between a day and a week are largely short-term holders (STHs), and their recent influx into the market carries certain risks.
This is because they tend to be more price sensitive than long-term holders (LTHs), as their coins are easily accessible and ready for distribution once the price of BTC falls below their cost basis.
According to MAC_D, this continued influx will lead to
“Inflows of new capital, rising prices and overheating will be the default values for futures and on-chain data in the future.”
An assessment of BTC’s Chaikin Money Flow (CMF) confirmed the steady inflow of liquidity into the market. BTC’s CMF was at 0.29 at press time, showing that buying activity exceeded coin sales.
Source: TradingView
Also regarding the coin's futures market, AMBCrypto reported Previously, BTC’s open interest recently rose to an all-time high.
Typically, BTC experiences a price correction when open interest rises to new highs as traders close their positions to take profits.
Read Bitcoins [BTC] Price prediction 2024-2025
While LTHs often take a more resilient approach, STHs are “paper” and can be sold quickly at any sign of trouble.
As the analyst noted, “A correction of 20-30% can occur at any time due to overheating.” However, this can result in a significant increase in the value of the coin.
“Of course, a 20-30% correction can occur at any time due to overheating, but the price of Bitcoin is likely to rise to almost $120,000 after the correction. Therefore, it is important to be optimistic when a temporary correction occurs rather than thinking about a downside bet on overheating.”
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