- Bitcoin’s recent price dip reveals a shift in its holders’ stance.
- In the past, this pattern has heralded the quiet whispers of a bear market beginning.
Bitcoin’s [BTC] recent price retracement to $74k signals a notable shift in market structure.
Short-Term Holders (STHs) are now encountering unrealized losses, while Long-Term Holders (LTHs) maintain profitability despite the correction.
In the past, when STHs transitioned into LTHs, it has often marked the onset of a bear market.
According to AMBCrypto, an influx of holders at a loss could increase selling pressure. Hence, prompting once-profitable holders to exit their positions.
Although this shift has yet to confirm a bear market, it warrants close monitoring. A continuation of this trend could point to the early stages of a more extended downtrend.
Psychological breakdown
Bitcoin’s rapid price appreciation in Q4 has led to an influx of Short-Term Holders (STHs), who are typically positioned for short-term gains and exit upon price upticks.
Since the invalidation of the $96k support in early February, STH-held supply has undergone marked decumulation, indicative of distribution under stress.
As illustrated in the chart below, STH Net Unrealized Profit/Loss (NUPL) has shifted into deep negative territory (extreme red). Historically, it has aligned with the early onset of bear market regimes.
Source: Glassnode
With BTC trading persistently below this realized threshold, approximately 3.6 million STH addresses remain in a state of unrealized loss.
Initially, this may imply a latent bullish setup.
However, if this holding behavior continues, it could lead STHs to LTHs – a pattern often seen during the late stages of corrections or the beginning of bear markets.
Bitcoin breach of supply zone to trigger profit-taking
These wallets, currently in an unrealized loss state, are positioning for a BTC recovery to either break even or capitalize on potential gains.
Since BTC last tested the $96k resistance two months ago, the prolonged holding period suggests an impending STH-to-LTH transition.
Source: TradingView (BTC/USDT)
Upon a breach of this key resistance, a significant profit-taking event could unfold, with the transition triggering a potential distribution phase.
In response, this distribution phase would amplify downside pressure, potentially catalyzing a full-scale bear market as profit-taking escalates.
Thus, the longer Bitcoin consolidates below resistance, the more sell-side liquidity accumulates, heightening the risk of a market correction.
Market watchers should remain vigilant.
