• Bitcoin’s recent price dip reveals a shift in its holders’ stance.
• In the past, this pattern has heralded the quiet whispers of a bear market beginning. 

Bitcoin’s [BTC] recent price retracement to $74k signals a notable shift in market structure. 

Short-Term Holders (STHs) are now encountering unrealized losses, while Long-Term Holders (LTHs) maintain profitability despite the correction. 

In the past, when STHs transitioned into LTHs, it has often marked the onset of a bear market.

According to AMBCrypto, an influx of holders at a loss could increase selling pressure. Hence, prompting once-profitable holders to exit their positions.

Although this shift has yet to confirm a bear market, it warrants close monitoring. A continuation of this trend could point to the early stages of a more extended downtrend.

Psychological breakdown

Bitcoin’s rapid price appreciation in Q4 has led to an influx of Short-Term Holders (STHs), who are typically positioned for short-term gains and exit upon price upticks.

Since the invalidation of the $96k support in early February, STH-held supply has undergone marked decumulation, indicative of distribution under stress. 

As illustrated in the chart below, STH Net Unrealized Profit/Loss (NUPL) has shifted into deep negative territory (extreme red). Historically, it has aligned with the early onset of bear market regimes.

With BTC trading persistently below this realized threshold, approximately 3.6 million STH addresses remain in a state of unrealized loss. 

Initially, this may imply a latent bullish setup. 

However, if this holding behavior continues, it could lead STHs to LTHs – a pattern often seen during the late stages of corrections or the beginning of bear markets.

Bitcoin breach of supply zone to trigger profit-taking

These wallets, currently in an unrealized loss state, are positioning for a BTC recovery to either break even or capitalize on potential gains.

Since BTC last tested the $96k resistance two months ago, the prolonged holding period suggests an impending STH-to-LTH transition.

Upon a breach of this key resistance, a significant profit-taking event could unfold, with the transition triggering a potential distribution phase.

In response, this distribution phase would amplify downside pressure, potentially catalyzing a full-scale bear market as profit-taking escalates. 

Thus, the longer Bitcoin consolidates below resistance, the more sell-side liquidity accumulates, heightening the risk of a market correction.

Market watchers should remain vigilant.