Bitcoin Price Struggles Below $61K as Short-Term Holders Face Test

Bitcoin’s price action has remained lackluster over the past 36 hours, oscillating in a narrow range between $62,843 and $63,600. The leading cryptocurrency is currently trading below its 50-day Exponential Moving Average (EMA) on the 4-hour chart, though it maintains its position above the 200-day EMA. This sideways movement comes as the market anxiously awaits a potential breakout, with technical indicators suggesting increased volatility may be on the horizon.

BTC/USD Technical Analysis Points to Potential Volatility

The Bollinger Bands indicator on Bitcoin’s 4-hour chart shows signs of divergence, hinting at an impending period of heightened price action. While the current price sits below the indicator’s middle band line, suggesting slight oversold conditions, the widening bands signal that a significant move could be imminent.

Short-Term BTC Holders at Risk if $61.6K Support Breaks

Bitcoin’s short-term holders (STH) – defined as those holding BTC for less than 155 days – may face a critical test in the coming days. According to Burak Kesmeci, a verified analyst on CryptoQuant, the average cost basis for STHs in the 1-3 month and 3-6 month cohorts stands at $61,633 and $64,459, respectively.

Kesmeci warns that if Bitcoin’s price drops below the $61,600 level, it could trigger panic selling among these short-term investors. The STH Net-Unrealized Profit/Loss (NUPL) metric is currently hovering just above zero, indicating that most short-term holders are barely in profit at current prices.

“If the average cost of the 1-3 month holders at $61.6K is lost, the patience of Bitcoin investors will be seriously tested,” Kesmeci noted.

Bitcoin’s Historical Q4 Performance Offers Hope

Despite the current price pressure, historical data provides some encouragement for Bitcoin bulls. Timothy Peterson, a prominent Bitcoin analyst, points out that while October has gotten off to its worst start in a decade, Bitcoin’s fourth-quarter performance is typically strong during bull market cycles.

Since 2015, Bitcoin has only posted negative Q4 returns in outright bear markets (2018, 2019, and 2022). Given the overall bullish sentiment in 2024, Peterson suggests:

“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.”

As Bitcoin teeters on the edge of critical support levels, market participants eagerly await the next major move. While short-term holders may face pressure if prices dip further, long-term historical trends continue to paint a bullish picture for the world’s leading cryptocurrency as it enters the final months of 2024.