Yeah short term holders are generally not a good way to measure the demand for bitcoin. The best way is to look at the long term holders and as prices goes up, are they selling.
Usually you will see that during every ATH and during some massive dips, there are long term holders selling. This can give you a clue as when to start taking profit or not.
I think it is, if you look at long-term holders, it means you are looking at people who bought Bitcoin years or months ago which in some sense can be considered outdated data, but when you look at short-term buyers, it means that people are currently buying and that is the correct way to measure the demand for Bitcoin in recent times because it's the current stats that matter and not the ones that are old. It's true that if there are a lot of long-term holders, it means Bitcoin is still in demand, but when you look at short-term buyers, it helps you understand whether the demand is increasing or decreasing.
Such data can also be useful for investors or traders to evaluate current situations and make their trades accordingly. If the demand is increasing and more people are buying, it means the price will go up soon, and if it's the opposite of that, expect a dip or a correction.