Recent data from crypto analytics firm CryptoQuant indicates that the number of bitcoins held by short-term holders has been declining since late May, suggesting a weakening in demand for the cryptocurrency.

In contrast, long-term bitcoin holders appear to be accumulating their positions as short-term holders sell off their holdings. "The fact that short-term holders are not accumulating can mean demand for bitcoin remains weak," CryptoQuant Head of Research Julio Moreno told The Block.

CryptoQuant's data reveals a notable shift in bitcoin ownership dynamics over the past few months. Short-term holders, defined as those who have held their bitcoin for 155 days or less, have significantly reduced their positions, particularly in July and August.

This sell-off by short-term holders could lead to medium-term price appreciation and market stabilization, according to CryptoQuant contributor IT Tech. "The data shows a clear capital flow from weak hands (short-term holders) to strong hands (long-term holders), signaling market stability," they said.

The charts show short-term investors exiting the market in the last two weeks, either realizing profits or losses. "The red areas on CryptoQuant's short-term holder net position chart indicate that this group of investors is becoming discouraged by volatility and attempting to reduce risk," IT Tech noted.

Conversely, CryptoQuant observed a net position increase by the long-term bitcoin holder cohort. "Long-term holder net positions have risen, suggesting that long-term investors continue to accumulate bitcoin," they said.

This dynamic could position the market for a potential rebound, as increased accumulation by long-term holders may lead to price stabilization.