Bitcoin's $85K Test: On-Chain Analytics Pinpoint Short-Term Profit-Taking

Bitcoin has recently tested the critical $85,000 support level, igniting widespread discussions across the crypto community about the market's true direction. With sentiment deteriorating and talks of a prolonged bear market surfacing, understanding the nature of recent selling pressure has become paramount. Fresh on-chain data provides a clear picture, suggesting that the recent price pullback is driven by short-term profit-taking rather than a structural capitulation by long-term investors.

Short-Term Holders Drive Recent Sales, Mostly at Profit

A recent report by CryptoQuant sheds light on the actual sellers behind Bitcoin's dip from the ~$88,200 region. On December 15, Short-Term Holders (STH) moved approximately 24,700 BTC to exchanges. Crucially, a significant 86.8% of this supply was realized in profit, equating to over $1.89 billion in profitable inflows, vastly outweighing any loss-driven selling. This indicates that these sellers were predominantly near-term buyers capitalizing on strength, rather than panicked investors liquidating assets under duress. As the price further declined towards $86,000 on December 16, STH inflows dramatically dropped to just 3,900 BTC, signaling an exhaustion of selling rather than an acceleration, despite a higher percentage of losses incurred on this smaller volume.

Long-Term Conviction Remains Strong Amidst Corrective Phase

In stark contrast, Long-Term Holders (LTH) exhibited muted activity throughout this period, with their exchange inflows falling from roughly 326 BTC to a mere 50 BTC. This lack of significant distribution from LTHs is a critical indicator, as historically, bear markets accelerate when these seasoned investors begin offloading substantial supply. The current absence of such behavior suggests that the recent drawdown is a healthy positioning adjustment and risk reduction phase, rather than a fundamental collapse in long-term conviction. Technically, Bitcoin is consolidating around the $85,000-$88,000 zone, currently interacting with the rising 100-week moving average, a dynamic support level that has held firm since 2023. The declining trading volume during this retracement further reinforces the view that the market is undergoing a corrective phase rather than aggressive distribution. While a failure to hold the $85,000 region could open the door for a deeper retracement towards the low-$70,000 range, a decisive reclaim of the $90,000-$92,000 zone would be essential to restore bullish momentum on the weekly timeframe and confirm the continuation of the broader uptrend.