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Is Bitcoin Losing Momentum? Short-Term Holders Decline Amid Record-Low Demand

Fresh data from on-chain analytics indicates a sharp decline in short-term Bitcoin holders (STH) and waning demand momentum, raising concerns about Bitcoin’s current market dynamics. As of June 19, wallets associated with short-term holders now control approximately 4.5 million BTC, a significant drop from 5.3 million BTC on May 27. This represents a decline of 800,000 BTC, or roughly 15.1%, in less than a month.

What Are Short-Term Holders, and Why Are They Important?

Short-term holders typically consist of investors who have purchased Bitcoin within the past few weeks or months. During bullish cycles, this group expands as new buyers enter the market, often acquiring Bitcoin from long-term holders. This activity generally drives price appreciation. Conversely, when the STH balance decreases, it may indicate a lack of new market entrants or that recent buyers are selling their holdings to either secure profits or minimize losses.

The shrinking STH balance is not an isolated trend. According to CryptoQuant, Bitcoin’s demand momentum has plummeted by 2 million BTC, marking the weakest level ever recorded. Over the past 30 days, demand increased by just 118,000 BTC, a significant slowdown compared to the 228,000 BTC growth seen by the end of May.

Institutional Demand and Retail Activity Show Weakness

The decline in demand is not limited to retail investors. Institutional players, often seen as key drivers of Bitcoin’s long-term growth, are also showing signs of reduced activity. Large-scale investors, commonly referred to as “whales,” have slowed their accumulation rate to 1.7% per month, down from 3.9% just a few weeks ago.

Moreover, U.S.-based Bitcoin ETFs have significantly decreased their daily purchases. In April, these ETFs were buying approximately 9,700 BTC per day, but the figure has now dropped to just 3,300 BTC daily.

Futures Market Reflects Increasing Caution

Traders in the Bitcoin futures market are also adopting a more cautious approach. Many liquidated their positions when Bitcoin reached $110,000 last week, opting to take profits. With Bitcoin’s price now hovering closer to $105,000, bearish sentiment is rising, and more traders are opening short positions, betting on further price declines.

Institutional Giants Remain Bullish

Despite the overall cooling in demand, some prominent institutional investors are doubling down on Bitcoin. Earlier this week, BlackRock completed a six-day buying spree, adding $1.4 billion worth of Bitcoin to its portfolio. This purchase increased its holdings to 670,295 BTC, valued at approximately $74.8 billion.

Similarly, MicroStrategy, the largest corporate holder of Bitcoin, recently acquired an additional 10,100 BTC, spending nearly $1.05 billion. The company now holds 592,100 BTC, accounting for about 2.98% of Bitcoin’s total supply.

Other notable players, such as Japan’s MetaPlanet and Europe’s The Blockchain Group, continue to build their Bitcoin reserves. MetaPlanet recently reached the 10,000 BTC milestone, while The Blockchain Group has been steadily increasing its holdings. These moves highlight ongoing interest from corporations and governments aiming to expand their Bitcoin reserves as part of broader investment strategies.

Bitcoin Price Trends

Bitcoin’s price has remained relatively stable over the past month, fluctuating between $100,000 and $110,000. As of now, the cryptocurrency is trading at just over $106,000, up approximately 2.4% from its lowest point earlier this week. However, if demand continues to decline, analysts warn that Bitcoin’s price could face further downward pressure in the near term.

Stay updated with the latest cryptocurrency news and trends to make informed investment decisions.

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