Buy the Bitcoin Dip? Not Until Short-Term Holders Show Gains, Says Compass Point

Betting on Bitcoin before it reclaims the $98,000 mark might not be the best idea, following the asset’s recent downturn, according to analysts at investment bank Compass Point.

That’s the current average cost for short-term holders, who have held the digital asset for less than 155 days—and are typically sensitive to price swings—they wrote in a Wednesday note.

Last week, the price of Bitcoin climbed to a two-month high of $97,500, according to CoinGecko. However, it failed to cross the threshold for short-term holders, the analysts wrote, bolstering fears that the digital asset’s price could be poised for a prolonged slide.

“One of the defining features of Bitcoin bear markets is promising relief rallies followed by violent sell-offs,” they wrote. “Last week’s rally was BTC’s strongest recovery since falling below the Short-term Holders’ cost basis on 10/30.”

Bitcoin hovered around $90,000 on Wednesday, after slipping as low as $87,900 the day before alongside tariff-fueled jitters stemming from U.S. President Donald Trump’s renewed bid for Greenland. The fall wiped out Bitcoin’s gains from over the past month.

The analysts noted that long-term holders, who have held Bitcoin for more than six months, have been selling less recently. After a period of moderate selling in late November, the cohort’s supply of coins has remained unchanged at 14 million Bitcoin, according to checkonchain.

Compass Point signaled that it would feel “more comfortable buying the dip” if Bitcoin’s price fell toward $80,000, but it warned that funding rates for perpetual futures remain elevated at 10%, suggesting that market participants are stepping in to buy Bitcoin with borrowed funds.

The analysts explained that “leveraged dip buying can preclude another wave of liquidations if BTC moves lower near-term.” When Bitcoin fell from an all-time high of $126,000, a historic cascade of liquidations showed how quickly markets can shift when trades are forcibly closed.

Last week, Bitcoin’s 50-day average jumped above its 200-day average, a pattern that’s widely interpreted as a bullish sign and referred to as a “golden cross.” At the time, Bitcoin was also closer to advancing past the psychological $100,000 mark. It has since invalidated this pattern, though, with the 50-day moving average falling below the 200-day average yesterday.

Jeff Park, CIO of crypto asset manager Bitwise, posited on X that on Tuesday that “this might be the worst Bitcoin sentiment ever.” With precious metals like gold and silver scaling new heights, he suggested that it’s because investors feel Bitcoin “should be up 10x.”