MVRV-Z score indicator retreated below 1.5, suggesting enough room for growth for BTC before hitting a local or cycle peak.
The incoming Trump Administration will undoubtedly be bullish for Bitcoin and the overall crypto market. However, this week’s market volatility and a brief drop below $90K have highlighted a crucial short-term risk factor worth tracking – BTC short-term holders (STH).
These investors have held BTC BTC $105 212 24h volatility: 0.1% Market cap: $2.09 T Vol. 24h: $15.42 B for about six months (155 days) or less. Their cost basis or average acquisition price (STH realized price) always acts as a key support level.
Additionally, their level of profitability can quickly influence the market, as they can sell at a loss when the price declines below their cost basis. This trend was seen during the liquidation cascade on August 5th and December 5th, dragging BTC lower.
Glassnode marked the current STH realized price at $88.4K, a whisker away from the low of $89.25K recorded on January 13th. Simply put, bulls have to keep BTC above this level for a sustained uptrend.
- Photo: Glassnode
Over 2 Million BTC underwater
Glassnode added that this week’s market volatility pushed 2 million to 3.6 million BTC held by STH underwater. However, the blockchain analytics firm clarified that the figures were below a key historical threshold to cause an alarm.
“While significant, this range is still lower than the 4 million coins in loss during the local market low set between July and September 2024. This suggests that the current market is likely in a less distressed state than it was during the previous corrective phase,” wrote Glassnode.
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Photo: Glassnode
- That said, analysts expect a surge to $118K in the medium term, which could bring most of STH BTC back to profit. The optimism was also supported by the MVRV-Z score (1-year-rolling), a valuation and market cycle indicator.
The metric (red) had previously flagged BTC local and cycle peaks when it crossed above 2. When it soared above 2, the crypto hit local tops in March ($73K) and December ($108K).
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Photo: Glassnode
Currently, the indicator has retreated below 1.5, suggesting enough room for growth for BTC to climb higher before hitting a local or cycle peak. By extension, it also implied that BTC was relatively undervalued at current levels.
It’s worth noting, however, that despite BTC’s attractive growth potential, a price drop below the STH cost basis of $88.4K could dent the current bullish market sentiment. Hence, it’s worth tracking as a risk management factor.
In the meantime, BTC was valued at $99.9K at press time, about 7% away from its all-time high of $108.3K.
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