Bitcoin's price is still recovering from a significant drop to $60,000 in the first three days of October.

As bulls and long-term holders continue to capitalize on the dip, analysis of on-chain data revealed that selling pressure has reduced considerably as most short-term holders have exited the market.

Interestingly, these short-term holders were responsible for the drop to $60,000, as data shows many of them abandoning the market during the initial decline, further exacerbating the price drop.

Exit of Short-Term Holders

According to an analysis of Bitcoin holding pools using data from the CryptoQuant platform, the amount of Bitcoin held by short-term holders has dropped substantially since the beginning of the month.

While this has contributed to the drop in Bitcoin's price during this period, it is not necessarily negative for the cryptocurrency in the future.

This notable drop is visible in purple bars on the chart below, with each period of price decline highlighted by an increase in selling from short-term holders.

Bitcoin's price, which ended September at around $65,000, has started October with a price drop amid broader market tensions.

This in turn led to a 7.5% drop to a low of $60,100.

Notably, the chart highlights that this most recent drop to the $60,000 level coincided with the emergence of more purple bars, revealing that selling by short-term holders played a significant role in the price drop.

What Does This Mean For Bitcoin?

Moving forward, selling by short-term holders and the price decline gave rise to further accumulation by long-term holders.

This in turn gives rise to the creation of a price floor around $60,000 in the coming weeks and months.

It also marks the transfer of more bitcoins into stronger hands who would rather hold than sell.

Notably, the exit of many short-term holders resulted in a better average cost for the group.

According to on-chain metrics revealed by a verified CryptoQuant analyst, the average cost for one- to three-month holders is now around $61,633, and the average cost for three- to six-month holders is around $64,459.

At the time of writing, Bitcoin is trading at $62,130, which places it right in the middle of these two groups of key holders.

According to analyst Burak Kesmeci, a decisive close above the $64,500 level would significantly strengthen the bullish momentum, giving more confidence to both short-term and long-term holders to continue holding.

On the other hand, if Bitcoin drops below $61,600, it could trigger a wave of additional selling pressure from more short-term holders, potentially leading to further price drops to revisit $60,000 again.

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