Bitcoin has regained momentum following a period of decline, with its price now trading at $87,992, reflecting a 6.9% increase in the past 24 hours. The recent price movement has drawn attention to shifting supply dynamics, particularly between short-term holders (STH) and long-term holders (LTH).
This trend, analyzed by CryptoQuant contributor XBTManager, provides insights into Bitcoins current market cycle and what could come next.
According to XBTManager, Bitcoins all-time high (ATH) has triggered an increase in STH supply while LTH supply declines. This transition typically signals a market shift, as long-term holders begin selling their assets while short-term traders accumulate.
This dynamic has historically played a role in determining peak levels, as increased activity from short-term holders suggests heightened speculative interest.
XBTManager explains that analyzing who is buying and selling Bitcoin is crucial in identifying market trends. As long-term holders sell their BTC, the supply moves into the hands of short-term traders, who often react more quickly to price fluctuations.
This shift indicates that Bitcoin may be in a pullback phase following its recent ATH, leading to a potential period of price consolidation. Additionally, institutional buyers and ETFs have continued to accumulate Bitcoin, behaving similarly to short-term holders during this phase.
MicroStrategy (MSTR), a major corporate Bitcoin investor, has also followed retail buying patterns. While institutional inflows support Bitcoins price, XBTManager warns that a prolonged consolidation period is possible due to liquidity demands.
The analyst suggests that once STH begins selling and LTH starts accumulating again, the market may stabilize, creating a more favorable environment for long positions.
While Bitcoins supply shift suggests a cooling-off phase, market participants are watching for signs of a potential trend reversal. A report from CryptoQuant highlights that real spot demand has been declining, meaning that despite recent price gains, sustained upward momentum may be difficult unless demand returns.
Additionally, IntoTheBlock recently revealed a surge in active Bitcoin addresses following last weeks price drop. This increase suggests heightened on-chain activity, often seen in periods of market transition. Whether this signals a renewed accumulation phase or continued volatility remains to be seen.
Last weeks drop triggered a surge in active addresses, pushing the daily average to its highest level since December, when Bitcoin surpassed $100k.
This uptick in on-chain activity coincided with an increase in zero-balance addresses, indicating capitulation. pic.twitter.com/eiESdiwERN
IntoTheBlock (@intotheblock) March 4, 2025
For now, supply trends, ETF inflows, and liquidity conditions are worth monitoring to assess Bitcoins next move. If long-term holders re-enter the market and demand recovers, Bitcoin could see renewed upward momentum.
However, until those conditions align, XBTManager suggests that caution is necessary, particularly for high-risk trades in the current environment.
Featured image created with DALL-E, Chart from TradingView