BTC Hits Near-Term Exhaustion After Strong Rally as Short-Term Holder Profit-Taking Intensifies

After a powerful rally, Bitcoin appears to have hit a degree of near-term exhaustion. The uptrend encountered resistance this week, breaking to a new yearly peak of $44.5k before sustaining the third sharpest selling-off of 2023.

On-chain data suggest that short-term holders (STH) are to blame for pausing the climb.

Bitcoin Short-Term Holders Capitalize on Soaring Prices

This month, the Bitcoin market took a full cycle, starting at $40.2k, surging to a fresh annual peak of $44.7k, and then experiencing a significant decline to $40.2k late on Sunday night. The ascent to the yearly high involved two rallies, each exceeding 5.0% per day. However, the sharp downturn was equally “powerful,” plummeting by more than $2.5k (-5.75%), marking the third most substantial single-day decline of 2023.

Bitcoin short-term holders have seized profits at a statistically meaningful magnitude in response to strong price appreciation over recent months.

According to Glassnode’s latest on-chain insight, the short-term holders are not only sending lots of coins to exchanges, but the average delta between acquisition and disposal prices is large.

The blockchain intelligence platform found that Bitcoin’s rally to $44.2k provoked a high degree of STH profit-taking activity. This essentially demonstrated that this cohort acted upon their paper gains, taking advantage of demand liquidity.

“The recent rally to $44.2k was accompanied by a statistically meaningful degree of profit-taking by STHs. Alongside the NTV-premium and extended Realized Profit/Loss Ratio, we can see a confluence of factors suggesting a potential saturation of demand (exhaustion) may be in play.”

Bitcoin Supply on Exchanges Keeps Shrinking

Short-term holders may have paused the rally, but long-term Bitcoin holders have remained mostly unfazed. As reported earlier, BTC supply on centralized crypto exchanges has fallen to its lowest level in six years, suggesting a decrease in the inclination to sell.

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This decline in BTC supply on exchanges is seen as a positive indicator, reflecting a growing preference among investors to retain their assets and a reduced willingness to sell. Additionally, the decrease implies a potential move towards decentralized and self-custody solutions.

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