Key Points
- Long-term Bitcoin holders have increased their selling activity as Bitcoin hits new highs.
- Spot Bitcoin ETFs are absorbing the selling pressure, allowing Bitcoin to continue its rally.
Bitcoin [BTC] continues to set new records, outperforming altcoins and trading at $97,350 at the time of writing.
Since the beginning of Q4, BTC has seen a 52% increase.
Long-term Holders Selling Bitcoin
According to a weekly on-chain report by Glassnode, all long-term Bitcoin holders are currently profiting.
The Net Unrealized Profit/Loss (NUPL) metric for these holders is at 0.75, indicating that they have not yet reached the euphoria or greed phase.
Long-term holders typically sell high and buy low. This pattern is repeating as their holdings decreased by over 200,000 BTC when Bitcoin surpassed $75,000 two weeks ago.
Accelerated profit-taking by these holders, who hold 14 million BTC, could potentially slow down Bitcoin’s rally.
Spot Bitcoin ETFs Absorbing Selling Pressure
Institutional demand for Bitcoin, particularly through spot Bitcoin exchange-traded funds (ETFs), is helping to absorb the selling pressure from long-term holders.
Data from SoSoValue reveals that weekly inflows to these ETFs have averaged between $1 billion and $2 billion in the past week.
Between 8th October and 13th November, Bitcoin ETFs absorbed 93% of the coins sold by long-term holders, helping to stabilize prices.
However, long-term holders have increased their selling activity in the past week, with the selling pressure outpacing the demand from ETFs. If supply and demand become unbalanced, it could lead to price volatility.
Short-term Bitcoin Holders and Profits
Data from CryptoQuant shows that the short-term holder Spent Output Profit Ratio (SOPR) has reached its highest level in a week.
The SOPR ratio of 1.03 suggests that the coins these traders are moving are valued 3% higher than their purchase price. This indicates that short-term holders are not yet at extreme levels of profitability, which could discourage profit-taking as they anticipate further price increases.
With market sentiment currently showing extreme greed, short-term holders, who typically capitalize on short-term price movements, might opt to hold or accumulate more coins in the near future.
Bitcoin Short Sellers Re-enter the Market
The distribution phase by long-term holders has affected the Bitcoin futures market. On Binance, 61% of traders have opened short positions on BTC, marking the highest percentage of short positions in over a week.
This increase in short positions suggests that traders view $100,000 as a strong resistance level for Bitcoin. However, if BTC surpasses this price, a short squeeze could lead to forced buying, which would extend the price rally.
