Bitcoin Long-Term Holders May Increase Sales Amid Price Gains and ETF Pressure

• Bitcoin’s long-term holders are increasingly opting for profit-taking, with data indicating a significant drop in their net BTC positions compared to a month ago.

• This trend suggests that while Bitcoin’s price approaches record highs, the ongoing support from institutional investors remains critical to sustain its breakout momentum.

• According to COINOTAG sources, crypto analyst Miles Deutscher stressed the importance of sustained ETF flows to offset the sell pressure from long-term holders.

Bitcoin long-term holders reduce their BTC exposure, prompting concerns over price stability. Institutional buying might be necessary to maintain momentum.

Long-term holders increase Bitcoin sales through November

Bitcoin’s price surge, nearing the critical milestone of $100,000, has prompted some long-term holders (LTHs) to take their profits, marking a shift in market sentiment. Recent data from Glassnode indicates a notable increase in LTH selling activity.

Long-term holders are defined as wallets that have held a minimum amount of Bitcoin for over 155 days. Historically, these holders represent the more stable and less speculative segment of Bitcoin investors. However, a recent change in behavior has emerged, as many LTHs have now transitioned to net sellers after a prolonged accumulation phase over the last six months.

The data reveals that on November 20, the net position for LTHs decreased by 245,000 BTC compared to the previous month. This indicates the largest decline over a 30-day period since April, highlighting a significant shift in the market’s dynamics.

Bitcoin LTH net position change. Source: Glassnode

In response to this trend, analysts have begun to emphasize the necessity of large-scale buying pressure to stabilize prices. Miles Deutscher pointed out that the recently launched U.S. spot Bitcoin ETFs could play a pivotal role in counteracting the increasing selling pressure from LTHs.

“ETF flows must remain strong; otherwise, long-term holder sell pressure may overwhelm the market,” he cautioned in a recent post.

US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors

Recently, the ETF sector has experienced unprecedented net inflows, further intensified by the launch of options trading designed to attract institutional investors. Data from Farside Investors revealed that on November 20 alone, this sector witnessed net inflows exceeding $770 million.

Despite these significant inflows, analytics underscore the difficulty in balancing the LTH selling trend, as evidenced by a chart shared by Deutscher, which illustrated that even with robust ETF activity, the struggle against LTH sell pressure persists.

Bitcoin LTH vs. ETF net position change. Source: Miles Deutscher/X

Bitcoiners sit on “significant” unrealized profits

Meanwhile, Glassnode’s analysis reveals that Bitcoin holders across the board are now sitting on substantial unrealized profits, a factor likely to influence future market behavior. The dynamics of supply may shift dramatically if these holders decide to take profits.

The firm’s recent newsletter, “The Week Onchain,” published on November 20, mentioned that as market investors’ profitability increases, the potential for new sell-side pressures rises proportionally.

One key metric highlighted was the market value to realized value (MVRV), which is currently nearly at levels seen during Bitcoin’s previous peak of $73,800 in March.

“Bitcoin’s price has risen above the +1σ band, now established at $89.5k,” noted the report, emphasizing the implications of such movements on investors’ psychological readiness for profit taking.

Bitcoin MVRV extreme deviation pricing bands (screenshot). Source: Glassnode

Glassnode’s analysts indicated that while the market often enters periods of “overheated” metrics during bull runs, historical patterns show that the market can sustain these conditions for extended periods, particularly in the presence of sufficient capital inflows that absorb sell-side pressure.

Conclusion

As Bitcoin approaches crucial price levels, the selling activity from long-term holders presents new challenges for maintaining upward momentum. The current market conditions suggest that significant reliance on institutional investment, particularly through ETFs, is essential to balance the potential impact of profit-taking by LTHs. Such dynamics signal a pivotal moment in the crypto landscape where the protective measures of institutional buying may determine the trajectory of Bitcoin in the remaining months of the year.