The price of Bitcoin has fallen below the average purchase price of short-term holders

Bitcoin (BTC) is currently trading below the average purchase price at which they bought it short term holders of BTC also known as short term holders (STH). These are investors who, according to onchain analysis, hold bitcoin for less than 155 days.

Onchain analyst James Check, going by the moniker Checkmatey, claims that a drop in the price of BTC below this level can cause the market to panic due to unrealized losses.

“These recent buyers are statistically the most prone to panic,” said the warning that short-term holders may thus proceed to decide to sell bitcoins at a loss, which would create further selling pressure on the price of BTC.

The problem with short-term holders

Recent price drop caused Bitcoin to reach its lowest level since February of this year. This is an important phenomenon especially for newer investors. They paid for it on average according to Glassnode data $59,600 for 1 BTC coin.

Thus, short-term holders currently have an average unrealized loss of more than 3%.

Source: Checkonchain

What comes next?

Check suggested that while holding an unrealized loss isn’t ideal, short-term Bitcoin holders have already experienced it.

“Most importantly, a break in the fundamental price of short holders is not the end of the world or the end of a bull market. It doesn’t help…but it is and it was a recoverable situation.” he wrote

Cryptocurrency analyst going by a pseudonym On-Chain College he also published a post about this topic on the social network X (Twitter) yesterday. In it, he stated that the average purchase price of short-term holders (STH) usually acts as a support/support during bull markets and as a resistance/resistance level during bear markets.

However, On-Chain College also recalled the period in August 2023. At that time, the price of Bitcoin also fell and remained below the average purchase price of short-term holders for a while. However, Bitcoin recovered from this and later started to grow more significantly towards the end of the year, which it continued in the first months of 2024.

Source: cointelegraph.com