Bitcoin: Why THIS signal echoes BTC’s pre-rally setup from last year

Key Takeaways

What does the drop in Bitcoin’s STH-NUPL signal say about recent market sentiment? 

It reflects growing distress among short-term holders and a potential reset of speculative positions.

How are long-term holders responding to the current market conditions? 

They’re still selling at a profit, showing confidence and increasing their long exposure.

Bitcoin’s [BTC] Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) has once again turned negative, signaling rising stress among recent buyers. This shift suggests that the speculative over-leverage seen in recent weeks is beginning to unwind.

Historically, similar levels of short-term holder distress have often preceded stronger, more sustainable rallies. 

In fact, the last time STH-NUPL reached this zone was in April of last year, just before Bitcoin kicked off a major bullish trend.

Source: Glassnode

Short-term pain, long-term opportunity

Usually, when short-term holders face mounting losses, markets often enter a reset phase where weaker positions are flushed out. For BTC, the short-term holders’ exits could be setting the stage for long-term participants to regain control.

According to CryptoQuant, Bitcoin’s long-term Spent Output Profit Ratio (SOPR) remains above 1. In fact, the ratio was 2.3 at the time of writing, suggesting that long-term holders are still selling at a profit.

These developments signal an increased market confidence among the long-term holders as they add more long positions in the market.

Source: CryptoQuant

What’s next for Bitcoin

On the weekly charts, BTC prices were building momentum from the current demand zone at $108K. If the bulls accumulate enough buying pressure, the resistance level at $128K could be the next target.

The Stochastic RSI is also bouncing off an oversold zone.

Source: TradingView

If history is any guide, the recent pullback could be laying the groundwork for renewed bullish momentum in BTC. 

As speculative positions fade and long-term holder sentiment strengthens, Bitcoin’s market structure may be shifting from short-term fear toward a longer-term recovery.