Why Long-Term Bitcoin Holders Are Selling: Insights on the Market Shift

Bitcoin Trading Below Record Highs

Bitcoin (BTC) is currently trading 13% below its record high of approximately $108,000, marking the largest discount since the U.S. election in early November. This decline has drawn attention as the largest cryptocurrency has frequently hovered around 10% below its record price, which some investors term a correction.

Selling Pressure from Long-Term Holders

The current selling pressure is largely attributed to long-term holders (LTHs), defined by Glassnode as investors who have held Bitcoin for at least 155 days. These investors typically sell during price surges after accumulating Bitcoin during lower price periods. Recently, LTHs have been offloading significant amounts of BTC, reducing their total holdings from around 14.2 million BTC in mid-September to approximately 13.2 million BTC.

On a notable day, Thursday, LTHs sold nearly 70,000 BTC, representing the fourth-largest one-day sell-off this year according to Glassnode data.

Rise of Short-Term Holders

Conversely, for every seller, there must be a buyer. In this scenario, short-term holders (STHs) have accumulated about 1.3 million BTC during the same timeframe, acquiring coins from LTHs and beyond. However, the recent narrative indicates that LTHs are now looking to sell more than STHs are willing to purchase, contributing to the price decline to around $94,500.

Market Dynamics and Supply

Currently, there are 19.8 million Bitcoin tokens in circulation, with an additional 2.8 million held on exchanges. This balance is decreasing, with about 200,000 BTC having exited exchanges over the past few months. The behavior of these cohorts will be crucial in monitoring Bitcoin's price activity going forward.