The price performance of Bitcoin over the past two weeks has been a major source of concern, as the coin’s value continues to drift away (about 15% down now) from its all-time high. As the flagship cryptocurrency slows down, the latest on-chain data suggests that a group of investors is exiting the market en masse.

More Short-Term Holders Are Giving Up Their Holdings

In an October 18 post on the X platform, on-chain analyst Darkfost revealed that a significant number of Bitcoin’s short-term investors have started to close their positions and realize their losses.

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Darkfost’s analysis was hinged on the Net Realized Profit/Loss metric, which tracks the net amount (in USD) of profits or losses that are realized on-chain. This metric measures the net profit or loss on a daily basis, averaged, in this case, over seven days. It provides insight into whether more investors are selling at losses or with their heads still above water..

According to the crypto pundit, the realized losses of BTC investors have surged to an approximate level as high as $750 million per day, one of the highest levels this current cycle has seen. Interestingly, Darkfost explained that the magnitude of these capitulation events stands easily comparable to those seen during the 2024 summer correction.

What’s worth noting about this capitulation phase is what may likely follow. According to the analyst, events like this usually precede local bottoms. What this means is that after short-term holders (known as the “weak hands”) have surrendered their holdings to the more-confident long-term holders (the “diamond hands”), the cryptocurrency stands a chance of seeing a price rebound — an expectation in congruence with historical trends.

However, on the more cautious side, Darkfost offered a subtle warning that the dreary opposite could also be the case in a situation where the market stands at an early bearish phase. 

Bitcoin Whales Might Be Accumulating Again

Supporting the positive redistribution theory, a Quicktake post on the CryptoQuant platform by Abramchart offers a glimmer of hope for Bitcoin market participants. Referencing the Inflows To Accumulation Addresses (Dynamic Cohort) metric, the analyst highlighted a significant inflow of more than 26,500 BTC into whale accumulation wallets. 

When large amounts of Bitcoin — such as this magnitude — are moved, it usually signals an underlying institutional or whale accumulation, as coins are typically transferred from exchanges to these wallets for long-term holding. 

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Following historical patterns, it is very likely that this accumulation event will precede a continued bullish expansion of the flagship cryptocurrency. As Abramchart explained, this trend all serves as a hint that smart money is “quietly buying the dip.”

As of this writing, Bitcoin holds a valuation of about $106,870, with no significant movement seen over the past 24 hours.

Featured image from iStock, chart from TradingView

Over the last month, Bitcoin ranged within the $100,000 — $110,000 price region until its recent breakout to reach a new all-time high. On-chain data show that a shift in BTC holder behavior may have played a significant role in the flagship cryptocurrency’s recent price action. 

LTHs Begin Distributing, But STHs Accumulate

In a July 12 post on the X platform, on-chain analyst Boris explained how a shift in Bitcoin holder activity has affected the market over the past months. This explanation was based on indicators measuring the Accumulation Vs Distribution of Long-Term Holders (LTH) and Short-Term Holders (STH).

For these two holder categories, the metric tracks and analyzes wallet behavior to determine whether they are increasing or decreasing their Bitcoin holdings over time. 

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For the long-term holders, the chart above shows how accumulation grew from the later days of May to the end of June. This is represented by the growing green graphs over the red. 

Within the same timeframe, the chart below shows short-term holders were represented more by the red graphs than the green, indicating more distribution than accumulation in the past month.

Boris credited the LTHs for Bitcoin’s survival above the $100,000 support zone. “Despite heavy STH distribution and retail selling pressure, BTC defended the 100K support — a clear sign of structural accumulation led by LTH wallets,” the on-chain analyst said.

According to Boris, the short-term holders were observed to have sold more than 563,000 BTC as Bitcoin continued to range. As this happened, the Long-Term holders steadily accumulated Bitcoin, and this absorbed most of the selling pressure from STHs.

However, this dynamic seems to have reversed very recently. The online pundit reported that the Long-Term Holders started distributing their Bitcoin holdings. This sell-off from the LTHs may be a result of profit-taking, as the cryptocurrency’s upward drift would necessitate. 

On the other hand, the short-term holders have started to accumulate Bitcoin. This trend seen with this reactive group of investors indicates renewed retail interest or speculative entry amidst the current bullish rally. 

Boris further inferred that this handover from LTH support to STH support must have fuelled Bitcoin’s latest breakout, as short-term momentum is injected into the market.

What’s Next For Bitcoin?

While this rotation of supply between holder classes may not be strange in crypto market cycles, the scale and timing of this switch suggest that Bitcoin’s price action holds more interesting rallies in the near future. However, if the short-term buying pressure should taper, the absence of long-term support may cause a lower support to be retested. As of this writing, Bitcoin is valued at $117,300, reflecting no significant movement in the past 24 hours.

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Featured image from iStock, chart from TradingView