Bitcoin (BTC) is currently trading approximately 13% below its all-time high of around $108,000, marking the most significant decline since the U.S. presidential election in early November. This recent downturn has prompted discussions about whether the market is experiencing a correction.
The primary driver behind this selling pressure appears to be long-term holders (LTHs), defined by Glassnode as investors who have held bitcoin for at least 155 days. Historically, LTHs tend to sell into price strength after accumulating bitcoin during periods of price depression. This pattern suggests a strategic approach to profit-taking.
Evidence suggests that LTHs began distributing a significant amount of BTC approximately a week ago. This trend has accelerated, with LTHs reducing their total holdings from roughly 14.2 million BTC in mid-September to around 13.2 million BTC currently. On Thursday alone, they sold nearly 70,000 BTC, representing the fourth-largest one-day sell-off of the year, according to Glassnode data.
Conversely, short-term holders (STHs) have been actively accumulating bitcoin, acquiring approximately 1.3 million BTC during the same period. This accumulation indicates that STHs have absorbed the coins distributed by LTHs and potentially more. The dynamic between these two groups provides insight into market sentiment and potential future price movements.
Recent market activity reveals a shift in the narrative, with LTHs demonstrating a stronger desire to sell than STHs are willing to buy. This imbalance has contributed to the recent price decline to around $94,500. Understanding this supply and demand dynamic is crucial for interpreting market trends.
Currently, there are 19.8 million BTC in circulating supply, with an additional 2.8 million held on exchanges. However, this exchange balance has been steadily declining, with approximately 200,000 BTC leaving exchanges in recent months. This trend suggests a potential shift towards long-term holding and reduced selling pressure.
The behavior of LTHs and STHs will be key factors to monitor in the coming days as they are likely to influence Bitcoin’s price trajectory. Observing these trends provides valuable insights for investors navigating the volatile cryptocurrency market.
The interplay between long-term and short-term holders often provides valuable insights into market dynamics and potential price trends. Continued monitoring of these cohorts will be essential for understanding the evolving Bitcoin landscape.
