As the price of Bitcoin (BTC) continues to soar, some long-term holders may be tempted to take profits, but analysts warn that institutional buying is essential to protect the BTC price breakout.
Long-Term Holder Sales Trend Accelerates
According to data from onchain analytics firm Glassnode, long-term holders (LTHs) have begun reducing their BTC exposure. LTHs are wallets holding a given amount of BTC for at least 155 days, and correspond to the less speculative end of the Bitcoin investor spectrum.
- After accumulating for most of the past six months, LTHs have flipped to net sellers.
- On Nov. 20, the LTH net position decrease reached 245,000 BTC compared to 30 days previously.
- This represents the largest comparative 30-day reduction since April.
- Bitcoin LTH net position change. Source: Glassnode
Institutional Buying Pressure May Be Necessary
Responding to this trend, crypto analyst Miles Deutscher suggested that only large-scale buying pressure could meaningfully counter the LTH trend.
- Top of the list are the United States spot Bitcoin exchange-traded funds (ETFs).
- "ETF flows must remain strong or else long-term holder sell pressure may catch up to the market," he warned in an X post.
- US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors
- The ETFs have seen record net inflows over the past month, this week boosting the industry further with the launch of options trading.
- Data from UK-based investment firm Farside Investors confirms that Nov. 20 saw net inflows of over $770 million.
Even Strong Inflows Struggle to Counter LTH Activity
An accompanying chart on Deutscher’s post nonetheless flagged even these accentuated inflows struggling to counter LTH activity.
- Bitcoin LTH vs. ETF net position change. Source: Miles Deutscher/X
Bitcoiners Sit on ‘Significant’ Unrealized Profits
Continuing, Glassnode acknowledged that Bitcoin holders of all kinds are now firmly in the black, with supply dynamics apt to change as a result.
- "As the profitability of market investors increases, the elevated potential for new sell-side pressure comes into play," it wrote in the latest edition of its weekly newsletter, ‘The Week Onchain,’ released on Nov. 20.
- Researchers highlighted the market value to realized value (MVRV) metric, which measures almost as much as at Bitcoin’s old $73,800 peak in March.
- "Bitcoin’s price has recently broken above the +1σ band, located at $89.5k," they commented on deviations in realized price.
- This signals that investors are now holding statistically significant unrealized profits, and suggests an increased likelihood of profit-taking activities.
- Bitcoin MVRV extreme deviation pricing bands (screenshot). Source: Glassnode
- Glassnode added that crypto bull markets often see long phases of ‘overheated’ metrics.
- Nevertheless, the market has historically remained in this overheated state for extended periods of time, especially when supported by sufficiently large capital inflows to absorb sell-side pressure.
Investor Takeaway
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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