Bitcoin's price has continued to climb in recent trading sessions, moving closer to a level that could signal a breakout. The upward trend has brought a shift toward cautious optimism in market sentiment.
As bullish momentum builds, however, increasing profits among short-term holders introduce a known risk that may hinder further gains.
Bitcoin recently reached a two-month high near $97,500, its strongest level since early November. This rebound occurred even as retail participation contracted. On-chain data from the past three days shows a decline in Bitcoin holders, indicating smaller investors have been exiting.
"There is a net drop of -47,244 holders, indicating that retail had been dropping out due to FUD & impatience," highlighted Santiment.
At the same time, exchange balances have fallen to a seven-month low of approximately 1.18 million BTC. Lower exchange supply often suggests reduced immediate selling pressure.
This marks the third time in three months that declining exchange balances have aligned with price stabilization. These signals together are bolstering confidence that Bitcoin may be forming another local bottom.
Macro indicators add nuance to the recovery story. The Market Value to Realized Value Long/Short Difference shows short-term holders regaining profitability dominance over long-term holders. Recent accumulation, combined with rising prices, has pushed short-term holder profits to their highest levels since January 2023.
Historically, elevated short-term profitability can be a double-edged signal. While it reflects improving demand and price strength, short-term holders are more prone to selling. So far, there is no clear evidence of aggressive distribution. Still, sustained gains could tempt these holders to lock in profits, potentially slowing Bitcoin's recovery.
Bitcoin is trading near $95,372 at the time of writing, moving within an ascending broadening wedge. This structure often carries bullish implications if the price breaks higher and holds. A confirmed breakout would require Bitcoin to reclaim $98,000 and successfully retest it as support.
If current conditions persist, the apparent bottom formation could support another leg higher. Holding above the $95,000 psychological level remains critical. A successful defense of this zone would likely encourage buyers to challenge $98,000 again. Flipping that level into support would open the path toward the $100,000 psychological milestone.
A bearish alternative remains plausible. Should bullish momentum fade and short-term holders begin booking profits, Bitcoin could lose the $95,000 support. Such a move would likely send BTC toward $93,471 or lower. A breakdown below that zone would invalidate the bullish thesis and delay any breakout attempts.