Bitcoin's Resilience: Short-Term Selling Pressure Eases, Market Stabilizes

Bitcoin's recent price dip has sparked discussions about a potential easing of selling pressure and market stabilization. Despite the decline, Bitcoin has shown signs of resilience, with short-term selling activity decreasing, indicating a shift in market sentiment.

According to a report from COINOTAG, the volume of BTC transacted at a loss by short-term holders has notably reduced, suggesting a recovery potential in the market. This decrease in panic selling signifies a potential market stabilization, as weaker hands possibly exit, indicating a more robust buying environment.

Following the February inflation report, the markets faced turbulence, which ignited speculation about the Federal Reserve's next moves. Bitcoin, which was previously consolidating above $97,000, experienced a significant drop, veering below the $95,000 mark before regaining some stability around $96,000. This price drop coincided with a wider sell-off across various risk assets, most notably impacting stocks from Bitcoin-related firms such as MicroStrategy (MSTR).

Bitcoin's sharp downward wick followed by a modest recovery signals initial panic selling before dip buyers stepped in. The Relative Strength Index (RSI), currently at 44.45, positions Bitcoin in a neutral-to-bearish zone, suggesting ongoing market hesitation. Furthermore, the On-Balance Volume (OBV) indicator illustrates weak buying pressure, reflecting caution among traders.

On-chain data indicates a noticeable easing of selling pressure from short-term holders (STHs). The volume of BTC transacted at a loss by STHs has decreased from early February's peak of 5.5K BTC to approximately 3.8K BTC, which is closer to the yearly average of 3.5K BTC. This reduction in panic selling signifies a potential market stabilization, as weaker hands possibly exit, indicating a more robust buying environment.

Interestingly, long-term holders (LTHs) appear largely inactive, showcasing strong confidence in their investments. This lack of capitulation among LTHs reveals that the recent price decline has not triggered widespread panic, further bolstering support at current levels. If this trend persists, Bitcoin could find stronger support, setting the stage for future recovery as sentiment improves.

The reduction in short-term holder selling pressure is a key indicator of potential market stabilization. Historically, significant sell-offs followed by a decrease in panic selling have indicated the formation