Bitcoin Experiences Significant Market Fluctuations
The leading cryptocurrency, Bitcoin, recently noted its longest losing streak since the rally that began following Trump’s election victory earlier this month. After an unsuccessful attempt to breach the $100,000 mark, Bitcoin dipped below $93,000, witnessing a 24-hour decrease exceeding 5%. However, it managed a swift recovery, trading above $94,200 during early Asian market hours on Tuesday. Meanwhile, the broader cryptocurrency market faced a downturn, shedding 3.8% within the same timeframe.
Profit-Taking by Long-Term Holders
As Bitcoin consistently reached all-time highs throughout the month, many long-term investors chose to capitalize on their gains. According to data from Glassnode, the selling pressure from these long-term holders has surged to its highest levels since April 2024. The cohort of long-term holders, specifically those who have held Bitcoin for 6-12 months, has been particularly active, averaging sales of 25.6K BTC per day. Notably, this group of investors has been responsible for a significant share of recent selling activity.
Those who held Bitcoin for 6-12 months have been selling their assets at an average cost basis that is 71% lower than the current market price of about $57.9K, taking advantage of the price movement as Bitcoin ascended from $74K to nearly $99K.
Spot Bitcoin ETFs: A Buffer Against Selling Pressure
In response to the aggressive selling from long-term holders, spot Bitcoin exchange-traded funds (ETFs) have been effectively absorbing this pressure. Following the recent U.S. elections, over $7 billion has flowed into U.S. spot Bitcoin ETFs, raising their total assets to over $105 billion. The resilience of these ETFs demonstrates their role as a cushion in turbulent market conditions.
Despite the substantial investments by significant players like MicroStrategy’s Michael Saylor, some market observers are puzzled by the lack of corresponding price increases. According to Eric Balchunas, the challenge seems to stem from selling pressure predominantly driven by long-term holders rather than institutional buys. On November 25, a notable $438 million was withdrawn from U.S. Bitcoin spot ETFs, with the Bitwise ETF logging the largest outflow of $280 million. Conversely, BlackRock’s IBIT ETF reported a net inflow of $267 million on the same day, highlighting the mixed dynamics within the ETF landscape.