Authors: UkuriaOC, CryptoVizArt, Glassnode; Compiled by: Bai Shui, Jinse Finance
Summary
As the price of Bitcoin rises to $100,000, long-term holders begin to distribute over 507,000 BTC, although still below the 934,000 BTC sold by sellers during the rally in March, it is still significant.
Long-term holders locked in a considerable amount of profit, setting a new ATH of $2.02B in daily realized profits.
In assessing the composition of entity spending, most of the selling pressure seems to come from tokens held between 6 months to 1 year.
Long-term holders are densely distributed
After a series of continuous new ATHs, Bitcoin's price is now very close to the impressive and long-awaited $100,000 per coin price. As with all previous cycles, the long-term holder cohort is leveraging the advantages of liquidity inflows and enhanced demand to begin massively distributing held supply again.
Since the LTH supply peaked in September, the cohort has sold 507,000 BTC. This is a considerable scale; however, it is smaller compared to the 934,000 BTC sold during the rebound in March 2024.
By assessing the percentage of total supply from long-term holders trading profit positions, we see a similar situation. Currently, an average of 0.27% of LTH supply is sold daily, with only 177 trading days having a higher sell rate among all trading days.
Interestingly, we observe that the relative ratio of LTH spending is higher than the ATH in March 2024, highlighting more aggressive selling activity.
We can also reference the LTH vitality metric to evaluate the balance between Coinday creation (holding time) and Coinday destruction (spent holding time). Typically, an upward trend in vitality is characterized by an environment of increased consumption activity, while a downward trend indicates that long-term holding is the main driver.
While the current supply distribution rate is greater than the peak in March, the amount of Coinday destruction remains low. This highlights that most LTH tokens traded may have been acquired recently (e.g., more likely to be 6 months rather than 5 years).
Profit locking
Long-term holders play a key role in the price discovery process, as they are the main source of previously dormant supply returning to liquidity circulation. As the bull market progresses, assessing the extent of profit-taking within this group becomes more cautious, as they tend to become increasingly active as prices rise.
Long-term holders are currently realizing profits of up to $2.02B daily, setting a new ATH, exceeding the new ATH set in March. Strong demand will be needed to fully absorb this oversupply, which may require a period of reaccumulation to completely digest.
By assessing the balance between LTH profit and loss amounts, we can see that the ratio of both accelerated rapidly in November. This is defined as a loss caused by insufficient LTH supply during this price discovery mechanism.
Historically, assuming a large and sustained influx of new demand, prices are expected to remain optimistic for a few months.
The seller risk ratio assesses the total amount of realized profits and losses locked by investors relative to asset scale (measured by realized cap). We can consider this metric within the following framework:
High value indicates that investors are spending tokens at a substantial profit or loss relative to their cost basis. This situation suggests that the market may need to find a new balance, and typically leads to highly volatile price movements.
Low value indicates that most tokens are being spent close to their breakeven cost basis, suggesting that some degree of balance has been achieved. This scenario usually means that the 'profit and loss' within the current price range has been exhausted and often describes a low volatility environment.
The seller risk ratio is approaching a high range, inferring that significant profit-taking is occurring within the current range. Nonetheless, the current readings remain significantly lower than the final values reached in previous cycles. This indicates that even with similar relative selling pressure, previous bull markets had sufficient demand to absorb supply.
Spending composition
After identifying a significant increase in profit-taking by long-term holders, we can increase the granularity of the assessment by carefully examining the composition of the sold supply.
We can utilize age segmentation of realized profit metrics to assess which subgroups contribute the most to selling pressure. Here, we calculate the cumulative profit-taking amount since November 2024.
6 months-1 year realized profit: $12.6 billion
1-2 years realized profit: $7.2 billion
2-3 years realized profit: $4.8 billion
3-5 years realized profit: $6.3 billion
5 years or more realized profit: $4.8 billion
Tokens held for 6 months to 1 year dominate the current selling pressure, accounting for 35.3% of the total.
Tokens held for 6 months to 1 year dominate, highlighting that most spending comes from tokens purchased recently, indicating that more long-term investors remain cautious and may patiently wait for higher prices. One might argue that these sell volumes may describe investors with a swing trading style who accumulated funds after the ETF launch and plan to ride the next wave of market momentum.
Next, we can apply the same methodology to categorize the size of profits realized by all investors based on locked investment return percentages.
0%-20% realized profit: $10.1 billion
20%-40% realized profit: $10.7 billion
40%-60% realized profit: $7.3 billion
60%-100% realized profit: $7.2 billion
100%-300% realized profit: $13.1 billion
300%+ realized profit: $10.7 billion
Interestingly, these groups exhibit a degree of consistency, with similar proportions of representation within the total. It could be argued that this represents an 'unrealistic' strategy where investors with lower cost bases realize similar dollar profits by selling fewer tokens over time.
Particularly focusing on tokens purchased during 2021, 2022, and 2023, we can observe a significant and sustained spending behavior during the peak in March.
However, in the current uptrend, the selling behavior mainly includes tokens purchased in 2023, while tokens purchased in 2021 and 2022 are just beginning to increase their selling pressure. This once again aligns with the possible explanation of profit-taking as the dominant strategy in a 'swing trading' style.
Measuring sustainability
To measure the sustainability of this upward trend, we can compare the current structure of URPD with the structure experienced during the ATH period in March 2024.
In March 2024, following a few months of appreciation after the ETF launch, several supply clusters changed hands between $40,000 and $73,000. During the subsequent seven months of price volatility, this area became one of the most significant supply clusters in history.
As the supply reaccumulates, it forms the final support from which this round of rebound began.
Fast forward to today, the market has rebounded so quickly that little BTC has changed hands between $76,000 and $88,000. From this, two key observations can be determined:
Price discovery is a process that often requires rebounds, corrections, and consolidations to confirm new price ranges.
There is some 'air gap' below $88,000, which could become a focus area if the market pulls back before attempting to break through $100,000.
As the market attempts to find balance in this price discovery mechanism, changes in supply distribution can provide insights into areas of interest for supply and demand.
Summary
With the support of rising prices, long-term holders are selling off. This has created an oversupply that must be absorbed to accommodate the continued price increase.
In assessing the composition of entity spending, most of the selling pressure seems to come from BTC held between 6 months to 1 year. This highlights the potential for older entities to further sell, as these entities need higher prices to sell their BTC.
