Bitcoin price continues to recover after a earnest decline to $60,000 in the first three days of October. As bulls and long-term holders continue to capitalize on the decline, analysis of on-chain data revealed that selling pressure had eased significantly as most short-term holders had exited the market. Interestingly, these short-term holders are responsible for the drop to $60,000, as data shows that many of them exited the market during the initial decline, further deepening the price decline.

Short-term holders exit the market

According to an analysis of cohorts of Bitcoin holders using data from the CryptoQuant platform, the supply of Bitcoin held by short-term holders has declined significantly since the beginning of the month. While this has contributed to the decline in Bitcoin’s price over this time frame, this is indeed the case not necessarily bad for cryptocurrency move forward. This noticeable drop is evident in the purple bars in the chat below, with each period of price declines highlighted by an enhance in compact holder sales.

Bitcoin, which ended at $65,000 in September, started October with a decline in prices amid broader market tensions. This, in turn, led to the price of Bitcoin falling by 7.5% until it reached a low of $60,100. In particular, the chart highlights that this recent drop to the $60,000 level coincided with the appearance of more purple bars, showing that selling by short-term holders played a significant role in the price decline.

What does this mean for Bitcoin?

Going forward, the sell-off by short-term holders and falling prices resulted in greater accumulation by long-term holders. This, in turn, creates a floor price around $60,000 in the coming weeks and months. This also means moving more bitcoins into stronger hands who prefer to hold rather than sell.

It is worth noting that the departure of many short-term bondholders resulted in a better average cost for this cohort. According to network metrics revealed by verified analyst CryptoQuant, the average cost for one-to-three-month account holders is currently around $61,633, and the average cost for three-to-six-month account holders is around $64,459.

At the time of writing, Bitcoin is trading at $62,130, which puts it in the middle of the two keyholder cohorts. According to analyst Burak Kesmeci, a decisive close above the $64,500 level would significantly strengthen the bullish momentum, giving both compact and long term holders greater confidence to continue holding their positions. On the other hand, if Bitcoin falls below $61,600, it could trigger a wave of additional selling pressure from more short-term holders, potentially leading to further price declines and a return to $60,000.

Featured image created with Dall.E, chart from Tradingview.com