Bitcoin Investors Beware: No Genuine Breakthrough Until Certain Conditions Met

Key Points

• Bitcoin’s Short-Term Holders (STHs) are currently holding at an average unrealized loss of 6%.
• Bitcoin has surged past four key resistance levels in the last two weeks, pushing previously underwater holders back into profit.

Bitcoin’s Short-Term Holders (STHs) are currently in an average unrealized loss of 6%.

A positive shift above their cost basis could change sentiment. The odds of this happening are yet to be determined.

Bitcoin’s Recent Surge

In the last fortnight, Bitcoin has managed to surpass four key resistance levels. This has brought holders who were previously at a loss back into profit.

Despite this, the Short-Term Holder Market Value to Realized Value (STH MVRV) ratio remains negative, indicating that short-term holders are still at an aggregate unrealized loss.

A sustained move above their cost basis is needed to stimulate fear of missing out (FOMO) and unlock further upside potential. On-chain data from Glassnode identifies $93.5k as the crucial breakeven threshold, marking a significant resistance cluster.

To maintain its current market value of $88,041 and extend the rally, the bulls need to prevent forced liquidations among short-term holders. This could otherwise lead to distribution-driven sell pressure.

Failure to do so could result in a repeat of the early August 2024-style capitulation event, where a negative STH MVRV reading was followed by a sharp drawdown from $68,525 to $54,343 in less than two weeks.

Crucial Week for Bitcoin

The immediate goal for the bulls is to turn the $93.5k resistance into support. This would push the STH MVRV ratio into positive territory and bring short-term holders into unrealized profits, thereby alleviating sell-side pressure.

This is especially important as we approach Q2, with macroeconomic changes likely to cause liquidity fluctuations. To prevent forced liquidations, Bitcoin needs to establish this as a demand zone.

On the 10th of March, Bitcoin’s retracement to its pre-election low of $78k sparked “extreme fear”, historically indicating a strong accumulation zone.

Since then, Bitcoin has risen 12.82%, bringing a significant proportion of stakeholders back to net unrealized profit.

This has shifted market sentiment into the “belief” phase, as suggested by the Net Unrealized Profit/Loss (NUPL) metric.

However, Bitcoin’s reclaim of $93.5k, a key Short-Term Holder (STH) breakeven level, remains uncertain. A sustained rejection here could trigger selling pressure, increasing the risk of liquidations.

A deeper downturn in STH MVRV would then confirm capitulation among weak hands, potentially accelerating a broader distribution phase.

As Q2 approaches with macroeconomic uncertainty, fresh volatility could be introduced – something to keep an eye on before trading purely based on bullish metrics.