Bitcoin's $100K Reclaim: A Tale of Short-Term Pain, Long-Term Resilience

Bitcoin's price briefly reclaimed the $100,000 mark, marking a significant milestone in its recent market trajectory. This development comes amidst a backdrop of market turmoil, with Bitcoin's price dipping below the $100,000 threshold earlier this week. However, signs of a rebound have begun to emerge, signaling a potential shift in the cryptocurrency's fortunes.

The recent dip has put a considerable portion of Bitcoin's supply held by short-term holders (STH) into the red. At $97,000, it appears that STHs saw their holdings divided between profit and loss, with approximately 11% of each. This metric underscores the precarious position of short-term traders who bought into the market at elevated prices, only to be surprised by a swift and sharp downturn.

In contrast, long-term holders (LTHs) have shown resilience. Less than 0.01% of their supply is in loss. However, the share of unrealized profit that they hold has been on a steady decline since November and now sits at its lowest point since September. This trend suggests that while LTHs are not selling in a panic, they are also not engaging in aggressive accumulation at these price levels. If Bitcoin continues to slide, LTHs reinvesting might mark renewed confidence in the asset's long-term value and provide some stability.

As Bitcoin fell under the $100,000 threshold, a wave of bearish discourse crashed across the crypto's social media channels. However, numerous analysts believe that the steep sell-off was a coordinated effort to force retail traders to liquidate their positions. These traders, who likely purchased near the recent local highs, were then driven below the local lows to sell in significant enough volumes to move the markets. The "strong hand" traders, who are unlikely to be moved by market conditions, then bought up the Bitcoin (BTC) and Ethereum (ETH) that these retail traders sold at bottom prices.

Despite the market downturn, institutional investors seem to be capitalizing on the lower prices. Between January 27 and January 31, 2023, Bitcoin spot exchange-traded funds (ETFs) saw a net inflow of $560 million. BlackRock's Bitcoin ETF (IBIT), alone, pulled in $751 million during that time. Both of