Bitcoin short-term holders will be ‘seriously tested’ if BTC loses $61.6K — Analyst

Bitcoin’s ( BTC ) price action has been sideways over the past 36 hours, as BTC has been unable to break away from a range of $63,600 and $62,843. As illustrated in the chart, BTC is currently under the 50-day EMA level but remains above the 200-day EMA on the 4-hour chart.

BTC/USDT on the 4-hour chart. Source: Trading View

Bollinger Bands (BB) indicate that the current price might be a little oversold, as it remains under the indicator's simple moving average (middle band line). However, the BB lines are currently in divergence, which indicates that the price action should experience short-term volatility.

Related: BTC short-term holders 'likely taking on more risk' as realized cap spikes by $6B

Bitcoin under $61,600 may test STH’s resolve, says Analyst

Bitcoin investors can be classified into short-term holders (STH) and long-term holders (LTH), and each group can play an important role. Long-term holders are associated with BTC addresses that have held Bitcoin for 155 days or more, while short-term holders are traders holding less than the aforementioned time span. 

Recently, Cointelegraph reported that short-term holders were ‘likely taking on more risk’ at the moment, with the BTC STH realized price witnessing a sharp increase. This also coincided with long-term holders ‘likely’ taking profits during the end of September. 

This means the immediate price action could be more dependent on short-term holders at the moment. In light of that, Burak Kesmeci, a Verified Analyst on CryptoQuant, highlights that the STHs may panic sell if BTC drops below $61,600. 

Bitcoin short-term holders’ average cost. Source: CryptoQuant

Kesmeci explains the current average cost of short-term Bitcoin holders for 1-3 months and 3-6 months was $61,633 and $64,459, respectively. As observed in the chart, the price is currently squeezing between this particular range and awaiting a directional break. The analyst claims that bulls will potentially gain market strength if $64,500 is topped. However, Kesmeci adds, 

“On the flip side, if the average cost of the 1-3 month holders at 61.6K is lost, the patience of Bitcoin investors will be seriously tested.”

Dropping under $61,600 may lead to short-term holders facilitating ‘panic-sell’ at a loss. Data from CryptoQuant indicates that the STHs are barely making a profit. The STH Net-Unrealized Profit/Loss by Cohort (STH-NUPL) chart is just above 0, which means that the majority of short-term holders are not in profit right now.

Bitcoin short-term holders net-unrealized profit/loss by cohorts. Source: CryptoQuant

Related: Bitcoin Coinbase premium turns negative as BTC price stalls under $63K

Bitcoin in Q4 is majorly profitable in a bullish cycle

While STHs can be compelled to sell in a choppy Bitcoin market, historical probability favours holding BTC through Q4. 

Timothy Peterson, a Bitcoin proponent, recently underlined that Bitcoin is having the worst start to October in 10 years. However, Peterson also points out that Bitcoin’s Q4 performance is ‘typically positive by a significant magnitude’. 

Bitcoin Q4 returns since 2015. Source: Twitter

Since 2015, Bitcoin has demonstrated negative returns in Q4 for only 2018, 2019 and 2022, which were outright bear markets. Considering the overall market in 2024 is long-term bullish, Peterson adds , 

“I would expect a gain of about 30-60% this quarter.  I'd say there's a 40% chance of $100k by the end of the year.”

Therefore, short-term holders may continue to hold even if BTC briefly drops below $61,600 over the next few weeks.