The Coincidence of High Prices and Selling Pressure
The recent surge in Bitcoin’s (BTC) price above $100,000 has been accompanied by a sharp drop in the supply held by its long-term holders. This peculiar trend suggests that some of the most seasoned Bitcoin investors are booking record profits as BTC’s price approaches the six-figure milestone.
Realized Profits Hit Record Highs
The chart below illustrates entities that hold Bitcoin for more than 155 days as long-term holders (LTH). Their behavior often reflects a shift in market sentiment.
Total Bitcoin Supply Held by LTH
As of December 19, the supply held by Bitcoin’s LTH dropped to $13.31 billion compared to its local peak of around $14.23 billion two months ago, according to Glassnode data.
In the same period, BTC’s price has risen from around $58,000 to over $100,000, indicating that LTHs have been selling their holdings at local highs.
Bitcoin Uptrend Above $100,000: Far from Being Exhausted
Bitcoin’s short-term holders (STHs) are stepping in to absorb sell-side pressure from long-term holders. Notably, the LTH supply’s decline has coincided with the rise in the Bitcoin supply held by STHs.
The ability of STHs to absorb this selling pressure has likely played a key role in sustaining Bitcoin’s price momentum above $100,000.
Bitcoin Total Supply Held by STHs
As seen in the chart below, the supply held by STHs has increased significantly over the past two months.
Market Sentiment and Speculation
Glassnode analysts UkuriaOC and CryptoVizArt noted that the proportion of wealth held by new investors has not yet reached the heights experienced during previous ATH cycle tops. They added:
"The interpretation here is that the market may not have reached the level of euphoric fervor, and saturation by speculators seen in prior cycles."
Bitcoin Realized HODL Waves: 24-hour—3-month BTC Holders
Another useful metric to assess the state of the market is the True Market Deviation (AVIV Ratio), which measures the average unrealized profit— or paper gains—held by active investors.
True Market Deviation (AVIV Ratio)
The AVIV Ratio helps determine whether the market is overextended or still has room to run. Historically, bull markets tend to peak when nearly all investor categories achieve substantial profits. This scenario often results in overwhelming sell-side pressure, as investors lock in gains while new buyers hesitate to enter at elevated prices.
Bitcoin AVIV Ratio Tops
As of December 19, the AVIV Ratio stood at 1.81, well below the extreme band of +3σ (2.3). This suggests that while profits are rising, the market has not yet reached levels of unsustainable euphoria. Therefore, Bitcoin could continue to climb even higher before profit-taking and reduced demand create a real market reversal.
Analysts’ Predictions
Analysts at Bitfinex exchange estimate Bitcoin’s correction to be mild in the coming months, stating that growing institutional demand will eventually propel BTC price to $145,000 by mid-2025, or $200,000 in the best-case scenario.
As of December 19, Bitcoin exchange-traded funds (ETF) are currently managing a little over $37 billion worth of assets, compared to $24.23 billion at the start of November, according to Farside Investors data.
Bitcoin ETF Cumulative Net Flows
Speculation is mounting within the crypto industry over the possibility that the incoming Trump administration could establish a strategic Bitcoin reserve for the United States. This move could push the price toward $800,000 by the end of 2025.
Disclaimer
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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In conclusion, the recent price rally above $100,000 has been accompanied by a sharp drop in supply held by long-term holders. This trend suggests that seasoned investors are booking record profits as BTC’s price approaches the six-figure milestone. The market sentiment appears to be driven by short-term holders stepping in to absorb sell-side pressure from long-term holders.
The True Market Deviation (AVIV Ratio) indicates that while profits are rising, the market has not yet reached levels of unsustainable euphoria. Analysts’ predictions suggest a mild correction followed by continued growth, with some even forecasting a price of $800,000 by the end of 2025.
It is essential to remember that investing in cryptocurrencies involves risk, and readers should conduct their own research when making a decision. Stay ahead with market insights by subscribing to our newsletter and refining your trading strategies.
