As the price of Bitcoin (BTC) approaches nearly $100,000, some long-term holders (LTHs) are not waiting to take profit. Data from onchain analytics firm Glassnode shows that LTHs have begun reducing their BTC exposure.
Long-Term Holders Reducing Exposure
Glassnode’s data reveals an accelerating selling trend among LTHs. These wallets hold a given amount of BTC for at least 155 days and are considered to be less speculative compared to other investors in the Bitcoin market. After accumulating for most of the past six months, LTHs have flipped to net sellers.
Selling Trend Accelerates
On November 20th, the LTH net position decrease reached 245,000 BTC compared to 30 days previously. This represents the largest comparative 30-day reduction since April. The chart below illustrates the LTH net position change.
Only Large-Scale Buying Pressure Can Counter LTH Trend
Responding to this trend, crypto analyst Miles Deutscher suggested that only large-scale buying pressure could meaningfully counter the LTH trend. Top of the list are the United States spot Bitcoin exchange-traded funds (ETFs).
ETF Flows Must Remain Strong
According to Deutscher, "ETF flows must remain strong or else long-term holder sell pressure may catch up to the market." He highlighted that US spot Bitcoin ETF netflows have seen record inflows over the past month. This week’s launch of options trading has further boosted the industry.
Data Confirms Strong Inflows
Data from UK-based investment firm Farside Investors confirms that November 20th saw net inflows of over $770 million.
Accompanying Chart Flags Struggling Inflows
However, an accompanying chart on Deutscher’s post flagged even these accentuated inflows struggling to counter LTH activity.
Unrealized Profits Create Sell-Side Pressure
Glassnode acknowledged that Bitcoin holders of all kinds are now firmly in the black, with supply dynamics apt to change as a result. Researchers highlighted the market value to realized value (MVRV) metric, which measures almost as much as at Bitcoin’s old $73,800 peak in March.
Market Value to Realized Value (MVRV) Metric
As the price has recently broken above the +1σ band located at $89.5k, investors are now holding statistically significant unrealized profits. This suggests an increased likelihood of profit-taking activities.
Crypto Bull Markets Often See Long Phases of "Overheated" Metrics
Glassnode added that crypto bull markets often see long phases of ‘overheated’ metrics. Nevertheless, the market has historically remained in this overheated state for extended periods of time, especially when supported by sufficiently large capital inflows to absorb sell-side pressure.
Conclusion
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Recommendations
- Conduct your own research before making any investment decisions.
- Consider the risks associated with investing in Bitcoin and other cryptocurrencies.
- Stay up-to-date with market trends and analysis to make informed decisions.
