Bitcoin Surges Past $120K, Indicating New Accumulation Cycle

Bitcoin has surpassed the $120,000 mark for the first time since early August, as the selling pressure from long-term holders has lessened, hinting at a new accumulation phase.

Key Points:

Bitcoin crosses the threshold of $120,000 as long-term selling pressure declines.
Short-term holders are absorbing losses, indicating market stabilization.
Neutral LTH flows might forecast a significant breakout.

Bitcoin (BTC) jumped above $120,000 as of October 10, marking a potential shift to an accumulation phase according to onchain data. The easing of the selling pressure from long-term holders (LTHs) suggests a more favorable market environment.

Data from Glassnode indicates the Short-Term Holder Realized Value (RVT) ratio has been consistently declining since May, reflecting reduced speculative excess. Elevated RVT values historically correspond with overheated markets, while contractions signal that short-term traders are gaining fewer profits relative to overall network activities. Sustaining this trend may enhance conditions for renewed accumulation, positioning investors for clearer market directions.

Bitcoin short-term holder realized value ratio. Source: Glassnode

On the supply side, the balance between long-term holders and institutional inflows remains essential. Following several months of consistent distribution, the Long-Term Holders Net Position Change (3D) metric is reportedly returning to neutral territory. This suggests a reduction in profit-taking that has impacted recent rallies, with exchange-traded funds (ETFs) and new inflows expected to guide upcoming momentum.

BTC LTH net position change. Source: Glassnode

If this trend of cooling supply continues, Bitcoin might establish a solid base between the $115,000 to $120,000 region, reminiscent of the consolidation phase seen in March and April.

With the distribution from LTHs reducing alongside short-term excess unwinding, analysts suggest the market could be gearing up for a decisive breakout, making $120,000 a crucial threshold to monitor.

Bitcoin four-hour chart. Source: Cointelegraph/TradingView

Short-Term Holder Loss Absorption

Despite the ongoing stabilization of long-term supply dynamics, short-term holders show critical trends. According to CryptoQuant, STHs experienced significant stress recently, with the STH-SOPR dipping to 0.992 by September. This indicates a phase where speculative wallets consistently realized losses, indicative of weaker holders exiting the market.

BTC short-term holder SOPR multiples. Source: CryptoQuant

However, the metric saw a slight rebound to 0.995 last week, still below August’s value of 0.998, suggesting early stabilization. Historically, resets like this unfold in two manners: prolonged loss realization causing corrective phases or a ‘healthy reset’ where selling pressure gets swiftly absorbed.

With Bitcoin consolidating above $115,000, the uptick in STH-SOPR might signal market resilience as it prepares for another bullish phase.

This information does not constitute investment advice. All investments carry risks, and readers should undertake their research before making decisions.