In the past day, Bitcoin‘s value saw a 1.3% decrease, currently stabilizing at approximately $113,600. The dip has sparked anxiety among some in the investment community about the possibility of continued decline. Contrary to this sentiment, short-term buyers appear to be capitalizing on the lower prices, suggesting optimism for a near-term price rebound.
Why Are Short-Term Investors Acquiring More?
Recent data points to a rise in Bitcoin holdings by investors who have been active for less than 155 days. Their cumulative Bitcoin has grown from 2,460,514 BTC to 2,503,798 BTC. Notably, this increase aligns with the period when Bitcoin prices dropped from $123,000 to $112,000, indicating a surge in buying activity among this cohort.
This buying behavior echoes earlier trends seen in June, when similar dips attracted increased purchases from short-term investors. The past instances of buying during these price drops have often been followed by a subsequent rise in Bitcoin’s value, underscoring some confidence among these traders.
Why Continue Buying at a Loss?
Despite the recent price downturn, short-term investors persist in accumulating Bitcoin, even incurring losses as a result. The Short-Term Holder Spent Output Profit Ratio (SOPR) touched its lowest level in a month on August 18, indicating sales at a loss during this period.
A SOPR below 1 generally suggests that sellers are experiencing losses. Historically, such conditions have been precursors to upward corrections in Bitcoin’s market value.
The persistence in buying despite losses suggests confidence rather than panic selling among short-term investors.
Is Recovery Possible Without Key Support?
Although Bitcoin faces downward pressure, signs of recovery are appearing as it stabilizes around $113,600. The critical support lies at $111,900, and maintaining this level is considered essential for rebounding possibilities.
Furthermore, the price still faces resistance at $114,600, with further hurdles at $116,715 and $118,197. Breaking through these levels, particularly surpassing $118,200, could signify a positive shift in market dynamics.
Past patterns show that aggressive purchases by short-term investors, along with SOPR shifts, often coincide with significant price bottoms. In previous occurrences, this resulted in $10,000 price increases within a matter of days.
Glassnode’s analysis mentions, “The recent accelerated purchases by short-term investors might indicate the formation of a price floor.”
Should this pattern repeat, Bitcoin might experience a new upward trend; however, a fall below $111,900 may alter these positive projections.
