The Future of Bitcoin and Bitcoin Holders: What Lies Ahead?

Last week’s major market movement turned the investments of short-term Bitcoin holders back to the red zone, as the asset fell below several key technical indicators. Furthermore, the bear market seems to be prolonging and may stay here for a while.

In an important report dated August 21, analysis provider Glassnode revealed that 88.3% or 2.26 million BTC of short-term holder supply is currently held at an unrealized loss.

Bitcoin and the Future of Bitcoin Holders

Glassnode had previously described the markets as “top-heavy” before the largest single-day selling wave of the year occurred. This refers to a situation where a significant amount of spot supply has a cost basis near or above the current price.

However, a large portion of this supply incurred losses during the 10% drop in BTC. The report noted that 12.8% or 2.48 million BTC of the supply reached a lower level by incurring an unrealized loss. Nevertheless, long-term holders remained “largely unsurprised and unresponsive.”

Additionally, the return to $26,000 pushed Bitcoin below several important technical indicators. The asset surpassed the 200-day and 200-week simple moving averages. It also fell below the 50-week exponential moving average but remained above the 1-year SMA at $23,500.

The report suggested that the cause of the crash was a significant derivative deleveraging and selling, which is a healthy part of market movement. Analysis provider Santiment commented on market sentiment and expressions of “buying the dip” on social media:

While investors pray for markets to drop so they can buy Bitcoin at a lower price, many think twice when a real opportunity is presented to buy the dip.

There is also speculation that BlackRock loaded up on BTC at lower prices before the launch of their ETF. However, crypto social media loves wild rumors.

BTC Price Outlook

BTC was trading sideways at $26,032 at the time of writing. It dropped to $25,874 on Monday but quickly recovered. Since its major drop last week, Bitcoin has found support at $26,000 for the past four days.

There could be another rally towards $24,800, which is a region previously targeted by analysts and another support area. Unless there is a disaster in the crypto markets, it is unlikely for the markets to fall below this level. On the contrary, the approval of a spot Bitcoin ETF could quickly send the asset back to $30,000.