Editor's note:
This report is translated from glassnode's (Riding the Liquidity Tide). Bitcoin has broken through all-time highs and is about to reach the much-anticipated $100,000. The reason behind it is not only the surge in market demand, but also the combined effect of ETF fund inflows and strong momentum in the spot market. This article focuses on the recent price dynamics of Bitcoin, providing an in-depth analysis of the key role of ETFs in absorbing selling pressure from long-term holders, and how stablecoin funds can boost market sentiment. In addition, through on-chain data analysis, this article reveals the profitability of investors and the spending behavior of long-term holders, showing the potential and risks of further market rises.
As the market enters a frenzy phase, the unrealized profits of long-term holders reach high levels, with selling pressure gradually surpassing the inflow capacity of ETFs, presenting new balance challenges for the market. For investors focused on the digital asset market, this article offers comprehensive insights from capital flows to investor behavior, helping you identify opportunities and risk signals in the next round of market volatility.
Key Takeaways
Bitcoin surged to 99,000, driven by strong capital inflows from ETFs and the spot market. Over the past 30 days, the market absorbed over $62.9 billion, with Bitcoin dominating the demand inflow.
The unrealized profits of long-term holders have reached high levels, prompting significant selling behavior, with a total of 128,000 Bitcoins sold from October 8 to November 13.
The US Spot ETF plays a key role during this period, absorbing about 90% of long-term holders' selling pressure, highlighting the importance of ETFs in maintaining market liquidity and stability.
💡 To view all charts in this report, please visit the 'The Week On-chain' dashboard.
Surge in Capital Inflows
Since early November, Bitcoin's price performance has been impressive, setting multiple new all-time highs throughout the month. Comparing the current cycle's price performance to the 2015 to 2018 🔵 and 2018 to 2022 🟢 cycles reveals significant similarities. Both in terms of gains and duration, the performance is remarkably consistent, despite vastly different market conditions.
This consistency during the week is fascinating, providing insights into understanding Bitcoin's overall economic price behavior and cyclical market structure.
Historically, bull markets typically last 4 to 11 months, providing a historical framework for assessing the duration and momentum of cycles.
Source: glassnode Real-time Chart - Bitcoin: Price Performance Since Cycle Low
This week, Bitcoin reached a new all-time high of 99,299, achieving an astonishing +61.3% performance for the quarter. In comparison, the quarterly gains for gold and silver were only +5.3% and +8.0%.
This apparent gap shows that capital may be shifting from traditional commodity value storage assets to the younger, digitized Bitcoin.
Bitcoin's market cap has also expanded to an astonishing $17.96 trillion, making it the seventh-largest asset globally, surpassing silver valued at $17.63 trillion and Saudi Aramco at $17.91 trillion.
Currently, Bitcoin is only about 20% behind Amazon, viewing this as the next important milestone.
Source: glassnode Real-time Chart - Bitcoin: Bitcoin vs Commodity Prices 90-Day Performance
After Bitcoin's impressive performance over the last 90 days, the broader digital asset market has begun attracting significant capital. Over the past 30 days, total capital inflows reached $62.9 billion, with Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supply grew by $9.6 billion.
These capital inflows symbolize the highest levels since the peak in March 2024, reflecting a rebuilding of confidence after the US presidential election and the emergence of new demand.
Source: glassnode Real-time Chart - Market: Change in Overall Realized Value Net Position
Further analyzing the capital inflow, the $9.7 billion in stablecoins minted over the past 30 days has mostly flowed directly into centralized exchanges. This inflow closely matches the total capital flow of stablecoin assets during the same period, emphasizing the critical role of stablecoins in facilitating market activity.
The surge in stablecoin balances on exchanges reflects strong speculative demand, as investors attempt to capitalize on trends, further reinforcing optimism and post-election momentum.
Source: glassnode Real-time Chart - Stablecoins: Net Position Changes in Exchanges
Investigating Investors' Profitability
We have explored how the rising tide of market liquidity supports Bitcoin's outperformance. Next, we will assess how this price behavior affects the unrealized profits of market investors (paper profits) and analyze using the MVRV ratio.
Comparing the current MVRV ratio 🟠 to its annual moving average 🔵 shows an accelerated increase in investors' profitability. This phenomenon typically supports sustained market momentum but also creates conditions where investors are more likely to start taking profits to realize these paper gains.
Source: glassnode Real-time Chart - Bitcoin: MVRV Momentum
As the profitability of market investors increases, potential new selling pressure also rises. By overlapping the MVRV ratio with the ±1 standard deviation bands, we can construct a framework to assess conditions of market overheating and cooling.
Overheated (warm color): MVRV above +1 standard deviation
Cooling (cool color): MVRV below -1 standard deviation
Bitcoin's price recently broke through the +1σ band located at 89,500, indicating that investors currently hold statistically significant unrealized profits, which suggests an increased likelihood of profit-taking activity.
Nonetheless, historically, markets tend to remain in such overheated states for extended periods, particularly when there is sufficient capital inflow to absorb selling pressure.
Source: glassnode Real-time Chart - Bitcoin: MVRV Extreme Deviation Pricing Bands
Extreme Spending by Long-term Holders
In the fervor stage of market cycles, the behavior of long-term investors becomes crucial. Long-term holders control a significant supply, and their spending dynamics can have a substantial impact on market stability, ultimately forming local or global peaks.
We can use the NUPL indicator to assess the paper profits held by long-term holders, currently at 0.72, just slightly below the thresholds of Belief 🟢 and Euphoria 🔵 at 0.75. Despite the significant price increase, the sentiment of these investors remains cautious compared to previous cycle peaks, indicating there may still be room for further growth.
Source: glassnode Real-time Chart - Bitcoin: Physically Adjusted Long-term Holder NUPL
As Bitcoin breaks through 75,600, the 14 million Bitcoins held by long-term holders have all entered profit, attracting accelerated spending. Since the historical high was breached, balances have significantly decreased by over 200,000 Bitcoins.
This is a classic and recurring pattern: whenever price behavior is strong and demand is sufficient to absorb, long-term holders begin to take profits. With a large amount of Bitcoin still held by long-term holders, many may be waiting for higher prices before releasing more coins into circulation.
Source: glassnode Real-time Chart - Bitcoin: Long-term Holder Profit Supply Analysis
We can use the long-term holder spending binary indicator to assess the intensity of selling pressure from long-term holders. This tool evaluates the percentage of days in the past two weeks where this group’s spending exceeded its accumulation, resulting in a net decline in their holdings.
Since early September, as Bitcoin's price has grown, the spending of long-term holders has steadily increased. Recently surging to 99,000, this indicator shows that over the past 15 days, there have been 11 days of declining long-term holder balances.
This highlights the increasing distribution pressure from long-term holders, but it has not yet reached the scale observed near the peaks in March 2021 and March 2024.
Source: glassnode Real-time Chart - Bitcoin: Long-term Holder Spending Binary Indicator (15 days) [Signal]
By identifying the spending behavior of long-term holders, we can gain deeper insights into their activities at critical market points using the next tool. The interaction between profit-taking and unrealized profits helps highlight their role in shaping cyclical transitions.
This chart visualizes:
Realized Price of Long-term Holders (🔵): The average buying price of long-term holders.
Profit/Loss Pricing Bands (🔵): Bands indicating extreme profits (+150%, +350%) and losses (-25%) levels, which typically trigger significant spending activity.
Profit-Taking (🟩): The stage where long-term holders hold over +350% profit and increase spending.
Surrender (🟥): The high spending period for long-term holders in a state of over -25% loss.
Bitcoin's price has broken through the +350% profit zone (located at 87,000), prompting significant profit-taking behavior from this group. As the market rebounds, distribution pressure may increase, while unrealized gains will correspondingly expand. That said, this historically often symbolizes the beginning of the most extreme stages of previous bull markets, where unrealized profits expanded to over 800% during the 2021 cycle.
Source: glassnode Real-time Chart - Bitcoin: Long-term Holder Behavior Analysis
Institutional Buyers
Now we turn our attention to the impact of institutional buyers on the market, especially through the US Spot ETF. In recent weeks, ETFs have become the primary source of demand, absorbing much of the long-term holders' selling pressure. This dynamic also highlights the increasing importance of institutional demand in shaping the modern Bitcoin market structure.
According to (Week 46: Election Effects Influence, Bitcoin Enters Euphoria!), since mid-October, ETF inflows have surged to between $1 billion and $2 billion weekly. This represents a significant rise in institutional demand and is one of the most significant inflow periods to date.
Source: glassnode Real-time Chart - Bitcoin: US Spot ETF Capital Inflow [BTC]
To visualize the opposing forces of long-term holders' selling pressure and ETF demand, we can analyze the 30-day changes in Bitcoin balances across different groups.
The chart below shows that between October 8 and November 13, ETFs absorbed approximately 128,000 Bitcoins, accounting for about 93% of long-term holders' net selling pressure of 137,000 Bitcoins.
This highlights the important role of ETFs in stabilizing the market during high selling pressure. However, since November 13, the selling pressure from long-term holders has begun to exceed the net inflows of ETFs, resembling the pattern observed in late February 2024, where supply-demand imbalances led to increased market volatility and consolidation periods.
Source: glassnode Real-time Chart - Bitcoin: Analysis of Long-term Holder and US Spot ETF Balance Changes
Summary and Conclusion
Bitcoin surged to 99,000, supported by strong capital inflows, with approximately $62.9 billion flowing into the digital asset industry over the past 30 days. This demand has been led by institutional investors in the US Spot ETF, possibly even capital rotating out of gold and silver.
ETFs play a crucial role in absorbing over 90% of long-term holders' selling pressure. However, as unrealized profits reach more extreme levels, we can expect more long-term holder spending behavior, which has already surpassed the inflow levels of ETFs in the short term.
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[Disclaimer] Markets carry risk; investment should be approached with caution. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest at your own risk.
'The Week Onchain) Week 47: BTC Market Cap Surpasses Silver! What are the reasons behind the ATH?' This article was first published in 'Crypto City'
