Bitcoin is entering a tough phase as analysts from Glassnode warn that short-term Bitcoin holders may pose a significant risk to the market. These investors, who have held Bitcoin for less than six months, are currently sitting on unrealized losses, raising concerns about potential sell-off pressure if market conditions worsen.
In a report released on September 4, Glassnode highlighted these short-term holders as a possible “source of risk.” Despite most long-term Bitcoin investors remaining in profitable positions, those who recently entered the market are under pressure. If the price continues to dip, these investors could liquidate their holdings, contributing to increased market volatility.
The analytics firm drew parallels to the uncertain market conditions of 2019, noting that while this isn’t a full-blown bear market, the risks are still present. Glassnode explained, “Until the spot price reclaims the short-term holder [STH] cost basis of $62.4k, further market weakness is expected.”
September: Bitcoin’s Historically Toughest Month
This warning comes during what has traditionally been Bitcoin’s most challenging month—September. Historically, the cryptocurrency has delivered its worst returns during this time, with volatile market conditions exacerbating the situation.
In addition to sell-off pressure from short-term holders, macroeconomic factors loom large. Bitfinex analysts have pointed out that the Federal Reserve’s potential rate cut in September could trigger further market declines. While a 25 basis point cut might provide some relief by boosting liquidity and easing recession fears, a more aggressive 50 basis point cut could send Bitcoin into a deeper slump.
The analysts warned that a 50 basis point cut could cause a 15-20% drop in Bitcoin’s value, pushing the price down to between $40,000 and $50,000. If this happens, short-term holders could accelerate the decline by selling their positions, intensifying the market’s downward trajectory.
Market Correction or Long-Term Opportunity?
Despite the looming risk of a 20% price drop, some experts see this as a short-term pain that could lead to long-term gain. A drop to the $46,000 level, which hasn’t been seen since February 8, would align with predictions from 10x Research, which has identified the low $40,000 range as an optimal entry point for the next bull market.
Other analysts, such as the popular crypto commentator Moustache, are less pessimistic. Moustache believes that Bitcoin’s strong support at $57,000 could hold, preventing a significant drop. However, if the price dips below this level, it could trigger the liquidation of over $300 million in leveraged short positions, according to data from CoinGlass.
Even if Bitcoin faces near-term turbulence, many analysts remain bullish in the long run. Historical patterns and technical analysis suggest that a six-figure Bitcoin price is “still in play.” Several experts have pointed to the final quarter of the year as a potential turning point, with some predicting “epic” price action as the year comes to a close.
Conclusion: Short-Term Volatility, Long-Term Optimism
As Bitcoin faces a tough September, short-term holders and macroeconomic factors are creating a precarious situation for the market. While some analysts foresee a potential 20% decline, others view this as an opportunity for long-term investors to buy in at lower levels. Despite the short-term risks, the consensus among many experts is that Bitcoin’s long-term outlook remains strong, with six-figure price predictions still on the table.
