Short term investors are in a "state of extreme panic", what will happen to Bitcoin?

In the past 24 hours, the price of Bitcoin has fallen to its lowest level of the week, hitting the $81,000 mark. The king of coins is still mired in red, recording a 6.6% decrease over the past week and a 2.3% drop in the last 24 hours.

These strong fluctuations have caused quite a few short-term investors to fall into a state of confusion and panic.

Panic and extreme fear

According to data from CryptoQuant, short-term Bitcoin investors are experiencing extreme panic and fear. Analysis indicates that since the beginning of February, short-term holders (STH) have been continuously liquidating their assets, accepting losses in the context of an unstable market.

Source: CryptoQuantThe willingness of investors to sell at a loss reflects a lack of confidence in the market. As a result, they seem to be lacking clear direction. This move stems from the fear of not wanting to incur further losses – a clear sign of market instability.

The STH SOPR index below 1 at the time of writing indicates that most on-chain moves are currently at a loss. In particular, during the price drop in March, short-term investors continuously sold off at larger losses, reflecting a dominant sense of panic and fear in their mindset.

Source: CheckonchainThe current lack of confidence in the market among short-term investors is confirmed by the decrease in the MVRV ratio for short-term holders. According to data from Checkonchain, the MVRV of STH has dropped to only 0.86, indicating that these holders are holding Bitcoin at a loss.

History has shown that when the MVRV of STH stays below 1 for a long time, the price tends to continue to decline due to weak demand for Bitcoin. With a higher sell-off rate of STH compared to the amount of buying, the price will decrease further.

Source: CryptoquantWhen analyzing the net flow on the Bitcoin exchange, we observe that investors have shifted to strong selling. As a result, BTC recorded two consecutive days of positive net flow for the first time in 12 days.

This shows the panic of short-term investors leading to higher selling activity from this group, with inflows to the exchange far exceeding outflows.

Source: IntoTheBlockThis market behavior is not limited to retail traders but also includes whales. According to data from IntoTheBlock, the net inflow rate on the exchange for large holders has turned positive over the past day, increasing from -0.09.

The positive shift indicator implies that whales are sending more BTC to exchanges, adding further pressure on the price chart.

What does this mean for Bitcoin**?**

According to the analysis, when short-term investors enter a phase of extreme fear and panic, Bitcoin is experiencing significant pessimism.

This pessimistic mentality is seen in both whales and retail investors. Typically, when whales and retail investors increase their cash flow into the exchange, it reflects a deep lack of confidence in the market.

Traditionally, the combination of both retail investors and whales on the sell side has led to higher selling pressure. Therefore, if fear remains in the market, we may see BTC recording more losses on the price chart.

However, if buyers see the drop in STH MVRV as a buying opportunity, BTC will reclaim $84,900 and attempt to move towards $87,000.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.

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Minh Anh

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