Bitcoin traders were in a frenzy as the market dropped below $70,000, according to the most recent data available. Glassnode, a firm specializing in onchain analytics, reported that short-term holders (STHs) sold off 54,000 BTC on October 31, marking the largest sell-off since April.
The profits of STHs began to dwindle as the price of Bitcoin started to decline from its near all-time highs this week. Glassnode’s data showed that on October 31 alone, a whopping 54,352 BTC (equivalent to $3.76 billion) was sent to exchanges in inbound transactions.
STHs are wallets that hold a specific amount of BTC for up to 155 days, and they are known for their reactionary trading patterns compared to long-term holders (LTHs) who keep their funds dormant for extended periods. The STH cohort is particularly sensitive to price volatility, and Glassnode’s findings suggest that their profit margins are diminishing rapidly, prompting them to sell off their holdings.
The STH spent output profit ratio (SOPR), which quantifies this phenomenon, currently stands at less than 1.01, with 1 serving as the breakeven point. Just two days prior, on October 29, it was close to 1.04. Glassnode also revealed that a significant portion of the BTC sent to exchanges on October 31 was done at a loss by STH entities.
Furthermore, data from CoinGlass, a monitoring platform for exchange order book liquidity, indicates that the next critical level of interest is around $68,000, with ask liquidity positioned between the current market price and the all-time highs.
Traders had mixed opinions on the recent market movements. Some cautioned that the surge above $73,000 could be a temporary deviation, while others pointed out that Bitcoin’s price behavior was following patterns seen in previous halving years. Popular X account HornHair reminded followers that similar derisking actions occurred around the time of the 2020 and 2016 elections.
As the week progresses, all eyes are on the upcoming United States macroeconomic report on nonfarm payrolls, scheduled for November 1. This data is crucial for traders dealing in risk assets.
It is important to note that this article does not provide investment advice or recommendations. All investment decisions involve risks, and readers are encouraged to conduct their own research before making any financial decisions.