Source: Glassnode
Author: UkuriaOC, CryptoVizArt
Compiled by: Bai Shui, Golden Finance
As the price of Bitcoin rises to $100,000, long-term holders begin to distribute over 507,000 BTC, although this is still below the 934,000 BTC sold during the March rally, it remains significant.
Long-term holders have locked in a significant amount of profit, setting a new daily realized profit high of $2.02 billion.
In assessing the composition of entity spending, most of the selling pressure seems to come from tokens held for 6 months to 1 year.
After a series of continuous new ATHs, Bitcoin's price is now close to the impressive and long-anticipated $100,000 mark. As in all previous cycles, the long-term holder group is leveraging liquidity inflow and increased demand to begin selling off held supply on a large scale.
Since the peak of LTH supply in September, this group has sold 507,000 BTC. This is a significant scale; however, it is smaller compared to the 934,000 BTC during the March ATH rally.
By assessing the percentage of total supply from long-term holders trading from profitable positions, we see a similar scenario. Currently, an average of 0.27% of LTH supply is sold daily, with only 177 trading days having a higher sell rate.
Interestingly, we can observe that the relative ratio of LTH spending is higher than the ATH in March 2024, highlighting more aggressive selling activity.
We can also refer to the LTH vitality metric to assess 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 spending activity, while a downward trend indicates that long-term holding is the primary driver.
Although the current supply distribution rate is greater than the peak in March, the amount of Coindays destroyed is still low. This highlights that most LTH tokens traded are likely recently acquired (for example, on average more likely 6 months rather than 5 years).
Long-term holders play a critical role in the price discovery process as they are the primary source of previously dormant supply returning to liquidity circulation. As the bull market progresses, it becomes increasingly cautious to evaluate the level of profit-taking within this group, as they tend to become more active as prices rise.
Long-term holders are currently realizing profits of up to $2.02 billion daily, setting a new ATH, exceeding the new ATH set in March. Strong demand is needed to fully absorb this oversupply, which may require a period of reaccumulation to completely digest.
Evaluating the balance between LTH's profit and loss volumes, we see that the ratio of both accelerated rapidly in November. By definition, this is due to the insufficient supply of LTH during this price discovery mechanism causing losses.
Historically, assuming a large and sustained influx of new demand, prices will remain optimistic for several months.
The seller risk ratio assesses the total amount of realized profits and losses locked in by investors relative to the asset scale (measured by realized cap). We can consider this metric under the following framework:
High value indicates that investors are spending tokens at a considerable profit or loss relative to their cost basis. This situation suggests that the market may need to find balance again and is generally associated with high volatility in price movements.
Low value indicates that the spending of most tokens is relatively close to their breakeven cost basis, suggesting that a certain level of equilibrium has been reached. This situation typically means that the 'profit and loss' within the current price range has been exhausted and generally describes a low volatility environment.
The seller risk ratio is approaching a high value range, inferring that significant profit-taking is occurring within the current range. Nevertheless, the current reading is still significantly lower than the final values reached in previous cycles. This suggests that even under similar relative selling pressure, prior bull markets had enough demand to absorb the supply.
After identifying a significant rise in long-term holders realizing profits, we can increase the granularity of the assessment by carefully examining the composition of the sold supply.
We can utilize the age segmentation of the realized profit metric to evaluate which subgroups contribute the most to selling pressure. Here, we calculate the cumulative profit-taking volume 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 realized profit: $4.8 billion
Tokens with a holding time between 6 months and 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 recently purchased tokens, indicating that more long-term investors remain cautious and may patiently wait for higher prices. One could argue that these selling volumes may describe investors with a volatile trading style who accumulated capital after the ETF launch and plan to ride the next wave of the market.
Next, we can apply the same method to classify the size of profits realized by all investors according to the percentage of locked returns.
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 show a certain level of consistency, with the proportions of all groups being similar in total. It can be argued that this represents an 'unrealistic' strategy where investors with lower cost bases achieve similar dollar profits by selling fewer tokens over time.
Focusing particularly on tokens purchased during 2021, 2022, and 2023, we can observe a substantial and sustained spending behavior during the March peak.
However, in the current uptrend, the sell-offs primarily include tokens purchased in 2023, while those purchased in 2021 and 2022 have only begun to increase their selling pressure. This again aligns with the possible explanation of 'swing trading' style profit-taking as the dominant strategy.
To assess the sustainability of this upward trend, we can compare the current structure of URPD with the structure experienced during the March 2024 ATH.
In March 2024, after several months of appreciation following the ETF launch, several supply clusters exchanged hands between $40,000 and $73,000. During the subsequent seven months of price fluctuations, 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 there is little BTC trading hands between $76,000 and $88,000. This leads to two key observations:
Price discovery is a process that often requires rebounds, corrections, and consolidations to confirm new price ranges.
There exists a sort of 'air gap' below $88,000, which could become a focus area if the market pulls back before attempting to break above $100,000.
As the market tries to find balance within this price discovery mechanism, changes in supply distribution can provide insights into areas of supply and demand of interest.
With the support of rising prices, long-term holders are selling off. This has led to an oversupply that must be absorbed to accommodate the continuous rise in prices.
In assessing the composition of entity spending, most of the selling pressure seems to come from BTC held for 6 months to 1 year. This highlights the potential for older entities to sell further, as they require higher prices to sell their BTC.
