Key Points
- Long-term Bitcoin holders are selling their holdings, potentially affecting market dynamics.
- Despite a decrease in demand and increased selling pressure, there is still potential for a market rally.
A significant trend is emerging among Bitcoin (BTC) holders, indicating potential shifts in market dynamics. Bid-ask imbalances suggest that sellers are currently dominating the market, which could potentially lead to a downturn.
The profitability of Bitcoin has decreased following a recent market correction, with gains now diminished. Current data shows that Bitcoin has seen a 19.86% increase. Despite a slight 0.37% price increase, doubts remain about Bitcoin’s ability to maintain these gains due to ongoing selling activity.
Long-term Holders Start Selling Bitcoin
Information from Glassnode shows that long-term Bitcoin holders have started to sell off their holdings, with the exception of “Ultra Long-Term Holders”, who have held their Bitcoin for more than seven years. Long-term holders are defined as those who have held Bitcoin for over six months (180 days).
The latest data indicates that the percentage of Bitcoin held by this group has decreased by around 10%, dropping from over 60% to around 50%. This shift in Bitcoin ownership is impacting the progression of the market. Generally, during initial stages, long-term and ultra-long-term holders control a significant portion of Bitcoin.
However, as selling pressure increases, this balance is shifting, giving short-term holders more influence in the market. Until short-term holders account for 70-80% of the market, which has not happened yet, the market remains in its early to mid-range phase.
Long-term Holders Losing Interest in Bitcoin
Long-term Bitcoin holders are losing interest more quickly than expected. This trend is evident across different cohorts of long-term holders, especially those who accumulated Bitcoin during the bear market between June and November.
These groups have started to significantly reduce their holdings, as shown by recent market trends. Specifically, the 3-5 year cohort, which peaked at 15.3%, has since decreased to 13.9%. If selling pressure continues to increase, Bitcoin could experience further declines.
The introduction of Bitcoin spot ETFs has brought a new dynamic to the market. Institutional investors, who have been accumulating Bitcoin in recent months, are now starting to sell, with their holdings decreasing from 25% to 16%. Nevertheless, there is still potential for a market rally. As long-term holders have not yet sold in large quantities, it suggests they may be waiting for prices to rise further before taking profits.
Low Demand for Bitcoin Puts Pressure on Price
Recent data from Hyblock shows a 50% bid imbalance in 1-2% of the order book depth. This imbalance indicates that the market is currently in a sell phase, characterized by low demand (fewer buyers) and high supply (more sellers), which puts downward pressure on Bitcoin’s price.
Simultaneously, data from CryptoQuant reveals an increase in the amount of Bitcoin available on exchanges, with approximately 22,289 BTC being deposited. This has resulted in a gradual increase in Exchange Netflow, further contributing to the growing supply of Bitcoin on exchanges.
