Bitcoin Holders Start Cashing Out as Price Soars
Bitcoin’s recent surge in price has led many long-term holders to start selling their positions, according to on-chain data. Glassnode, a leading analytics firm, reported that since December 2023, long-term investors have distributed approximately 480,000 BTC, representing a 45% increase in value.
The Distribution Phase
James Check, the lead analyst at Glassnode, revealed that about half of the old coins being sold in the past three months came from the Grayscale Bitcoin Trust. As the largest Bitcoin fund globally, Grayscale has experienced continuous outflows since converting into a Bitcoin spot ETF on January 11. During this time, they dumped 202,873 BTC onto the market.
Overall, long-term holders are currently distributing their coins at a rate of 257,000 BTC per month. This is significantly lower than the rates seen during major market expansions in mid-2019 and early 2021 when HODLers sold BTC at rates of 319,000 BTC per month and 836,000 BTC per month, respectively.
“Like clockwork, long-term #Bitcoin holders have started their ATH distribution,” wrote Check. “It goes to show that there are HODLers who can and do read the market very well.”
A HODLer is defined as someone who has held BTC in one wallet for over 155 days. On-chain data shows that these long-term holders have an average cost basis of $20,700 for their holdings. With the current price of BTC at $64,700, they are sitting on a profit of approximately 225%.
Glassnode’s Tuesday report explained that these investors are approaching a state of euphoria as they see an increased incentive to spend and take profits. Historically, as new market all-time highs (ATHs) are reached, this group of holders tends to ramp up their spending, accelerating distribution until they help form the macro top of the cycle.
Bitcoin’s Recent All-Time High
Bitcoin briefly reached a new all-time high on Tuesday at $69,200 before experiencing a pullback to $64,000. This drop was accompanied by over $700 million in crypto market liquidations.
Despite the pullback, Glassnode believes that the new demand for BTC may be enough to offset the sell pressure from old investors for several months. This is based on historical trends, as the average long-term holder has been net-selling BTC over an 8 to 15-day period for the past 42 days. In previous bull markets, such sell pressure was sustained for between 123 and 225 days.
Glassnode stated, “It may suggest that demand inflows could offset long-term holder spending for several months ahead if history is any guide.”
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