- BTC’s next bull run could happen if short-term holders spend less and accumulate more.
- The last few days have been marked by the exit of “weak hands.”
According to pseudonymous CryptoQuant analyst Crazzy blockk, an assessment of key on-chain metrics suggested that short-term Bitcoin [BTC] holders could be instrumental in driving the next bull run for the king coin if they continue to accumulate and spend less.
To arrive at this conclusion, the analyst examined BTC’s Spent Output Profit Ratio (SOPR), Adjusted Spent Output Profit Ratio (aSOPR), and Unspent Transaction Output (UTXO) metrics.
According to the SOPR, ASOPR, and STH-SOPR metrics, short-term holders have been spending their profits. This has led to a surge in BTC accumulation and a reduction in selling pressure in the last few weeks, Crazzy blocck found.
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He opined further:
“During the coming months, if the short-term holders are interested in accumulating and entering at this level and are not interested in selling in exchanges for price growth, it will be a bullish sign for Bitcoin. These factors usually lead to short-term holders will become long-term holders, according to bitcoin’s past price cycles.”
Capitulation is the word of the day
On 24 February, it was reported that in January 2023, the year-on-year increase in the personal consumption expenditure price index (PCE) in the United States accelerated to 5.4%, up from a revised 5.3% increase in the previous month.
The prices of goods rose by 4.7%, down from 5.1% in December, while the prices of services increased by 5.7%, up from 5.4%.
The increase in the PCE index by 5.4% year-on-year in January 2023, indicated that prices for goods and services have gone up, which could lead to a decrease in the purchasing power of consumers.
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After the announcement, short-term traders of BTC started to sell their holdings as a precautionary measure against potential losses if the price of BTC significantly dropped. Per data from CoinMarketCap, BTC’s price has since fallen by 3%.
According to CryptoQuant analyst JayBot:
“Perhaps, Bitcoin can continue to rise after overcoming the selling of short-term holders.”
Further, an assessment of BTC’s Network Profit/Loss ratio (NPL) confirmed increased sell-offs by “weak hands” in the past few days. According to data from Santiment, BTC’s NPL suffered a significant dip on 25 February.
The NPL metric dips are often associated with brief periods of capitulation by “weak hands” and the resurgence of “smart money” into the market.
As a result, these dips are usually accompanied by local rebounds and phases of price recovery. In the last 24 hours, BTC’s value has climbed by 0.4%.