On-chain data shows the Bitcoin short-term holders have just made large deposits to exchanges, a potential sign profit-taking is underway.
Historically, the former cohort has proven to include the weak hands of the market who panic sell whenever volatility emerges in the asset, while the latter is made up of the blockchain’s diamond hands.
Bitcoin has witnessed a sharp rally over the past week that has taken it past the $122,000 level. Considering the nature of the STHs, it would be expected that they would be looking to take some profits.
For LTHs, tracking selling can be simple because as soon as a member of the cohort breaks their dormancy, their coins exit the cohort and enter the STHs, as their age counter resets back to zero. It’s not quite as easy in the case of the STHs, however, as the group’s coins are constantly in motion within its members.
One way to gauge STH selling is through their transactions to exchanges. Generally, one of the main reasons why investors use these centralized platforms is for trading-related purposes, so deposits to them can be an indication that there is demand for selling the cryptocurrency.
Below is the chart shared by Maartunn that shows the trend in the exchange inflows coming from the Bitcoin STHs.
In total, the STHs have transferred 46,276 BTC over a 24-hour span during the latest run. At the current exchange rate, this is equivalent to a whopping $5.7 billion. The analyst notes that this is one of the largest spikes that the indicator has seen recently.
It now remains to be seen whether enough demand will appear to absorb this selling pressure, or if the profit-taking will provide impedance to the Bitcoin rally.
At the time of writing, Bitcoin is floating around $122,700, up more than 11% over the last seven days.
