By Yasin Ebrahim
Investing.com – Bitcoin jumped Monday, erasing its losses for the year and sparking fierce debate on whether this latest surge marked the beginning of the crypto's attempt to dig itself out of bear market territory.
Bitcoin rose 4% to $47,910.
The rally took the popular cryptocurrency well above $45,900, a price level that previously drew strong support on the way down, but turned into a ceiling, or resistance on the way up, stifling the BTC's prior attempts to breach this level in 2022.
“This is a key level to watch in case the market can break and hold it, which may suggest a regime shift towards greener pastures,” Glassnode said in a weekly note.
While the gains in bitcoin have provided the popular cryptocurrency with some breathing room, the key to sustaining the momentum, at least in the immediate term, rests with short-term holders, “who typically provides resistance in a bear market,” Glassnode added.
These short-term holders – entities holding coins for 155 days or less — did most of their buying between $38,000 and $45,000, and may be tempted to sell into this latest rally to exit at cost, or scratch (in trading parlance) having held their BTC at a loss for so long.
If the short-term holdings pull the sell trigger, however, history suggests this may prove short-term pain and long-term gain for bitcoin as longer-term investors – those with staying power – are likely to snap up more BTC.
This changing phase of accumulation from weaker hands to stronger hands is part and parcel of the bottoming phase in a bear market.
While the latest data suggest that this 'changing of hands' process continues to rack-up momentum – as the proportion of coin supply aged 1yr+ rapidly approaches all-time-highs – the jury is out on whether this process has fully reset.
“The process of bottom formation and investor capitulation in a bear market is often a lengthy and painful process, and Bitcoin is by no means out of the bearish woods yet,” Glassnode added.