Original title: Touching Distance
Original authors: UkuriaOC, CryptoVizArt, Glassnode
Original text translated by: Bai Shui, Golden Finance
Summary
· As Bitcoin's price rises to $100,000, long-term holders begin to distribute over 507,000 BTC, although still below the 934,000 BTC sold during the March rally, it remains significant.
· Long-term holders locked in considerable profit amounts, setting the daily realized profit to a new ATH of $2.02 billion.
· When evaluating the composition of entity spending, most of the selling pressure seems to come from tokens held for 6 months to 1 year.
Long-term holder distribution is dense
Following a series of continuous new ATHs, Bitcoin's price is now very close to the impressive and much-anticipated price of $100,000 per coin. As with all previous cycles, the long-term holder group is leveraging the advantages of liquidity inflows and strengthened demand to begin large-scale distribution of held supply again.
Since the peak of LTH supply in September, this group has sold 507,000 BTC. This is quite a substantial scale; however, it is smaller relative to the 934,000 BTC sold during the March ATH rebound.
By assessing the percentage of total supply from long-term holders in profitable positions, we see a similar situation. Currently, an average of 0.27% of LTH supply is sold daily, with only 177 trading days showing a higher selling rate.
Interestingly, we can observe that the relative ratio of LTH spending is higher than the ATH in March 2024, underscoring more aggressive selling activity.
We can also refer to the LTH (Long-Term Holder) vitality metric to assess the balance between Coindays created (holding time) and Coindays destroyed (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 main driver.
Although the current supply distribution rate is greater than the peak in March, the amount of Coindays destroyed remains low. This highlights that most LTH token transactions may have been acquired recently (for example, averaging more likely to be 6 months rather than 5 years).
Profit Locking
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 assess the degree of profit-taking from this group, as they tend to become more active with rising prices.
Long-term holders are currently realizing profits of up to $2.02 billion daily, setting a new ATH, surpassing the new ATH set in March. Strong demand is needed to fully digest this supply surplus, which may take a period of re-accumulation to fully absorb.
By evaluating the balance between the profit and loss amounts of LTH, we can see that the ratio of both accelerated rapidly in November. By definition, this is due to losses caused by an undersupply of LTH during this price discovery mechanism.
Historically, assuming a significant and continuous inflow of new demand, prices are expected to remain optimistic over the coming months.
The seller risk ratio assesses the total amount of realized profits and losses locked in by investors relative to asset size (measured by realized market cap). We can consider this metric under the following framework:
· High value indicates that investors are spending tokens for substantial profits or losses relative to their cost basis. This situation suggests that the market may need to find a new balance, and high volatility price movements are often seen.
· Low value indicates that the majority of token spending is relatively close to their breakeven cost basis, indicating that a certain level of equilibrium has been reached. This situation usually means that the 'profit and loss' within the current price range has been exhausted, often describing 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 indicates that, even under similar relative selling pressure, previous bull markets had enough demand to absorb the supply.
Spending Composition
After identifying a significant increase in long-term holders' profit-taking, we can increase the granularity of the assessment by carefully examining the composition of the sold supply.
We can use age segmentation of the realized profit metric to evaluate which subgroups contribute the most to selling pressure. Here, we accumulate profit-taking volumes calculated 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
· Profit realized for more than 5 years: $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 recently purchased tokens, indicating that more long-term investors remain cautious and may patiently wait for higher prices. One might argue that these sell volumes could describe investors with a volatile 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 method to categorize the size of profits realized by all investors by the percentage of locked investment 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 exhibit a certain degree of consistency, with all groups holding a similar proportion of the total. This could represent an 'unrealistic' strategy where investors with lower cost bases gain similar dollar profits by selling fewer tokens over time.
Focusing particularly 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 rally, the sell-off primarily includes tokens purchased in 2023, while tokens bought in 2021 and 2022 are just beginning to increase their selling pressure. This again aligns with the possible explanation that profit-taking is the dominant strategy of 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 in March 2024.
In March 2024, following appreciation months after the ETF launch, several clusters of supply changed 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 supply re-accumulates, it forms the final support from which this round of rebound began.
Fast forward to today, the market has rebounded so quickly that few BTC have changed hands between $76,000 and $88,000. This allows for two key observations to be made:
· Price discovery is a process that often requires rebounds, corrections, and consolidations to confirm new price ranges.
· Below $88,000, there exists a kind of 'air gap'; if the market retraces before attempting to break through $100,000 again, this gap may become an area of concern.
When the market attempts to find a new balance in this price discovery mechanism, changes in supply distribution can provide insights into areas of supply and demand of interest.
Summary
Supported by rising prices, long-term holders are selling. This has created an oversupply that must be absorbed to accommodate the continued price increase.
When evaluating 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 further sell, as these entities require higher prices to sell their BTC.
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