Bitcoin Dips Below $93K as Long-Term Holders Take Profits After $100K Rally Stalls

Bitcoin briefly dipped under $93,000 on Monday, marking its longest losing streak since the latest rally kicked off earlier this month. After a failed attempt to break the $100,000 barrier, the cryptocurrency saw a 24-hour drop of more than 5%, though it quickly rebounded above $94,200 by Tuesday morning. This dip came amidst broader market struggles, with the entire crypto market down 3.8% in the last 24 hours.

Bitcoin’s Recent Struggles: A Result of Profit-Taking

Bitcoin’s performance over the past few weeks has been nothing short of impressive. The cryptocurrency surged to new all-time highs, crossing the $99,000 mark in a rally that was sparked by Donald Trump’s win earlier this month. But as Bitcoin pushed higher, a familiar pattern emerged: long-term holders started cashing out their gains.

Long-term Bitcoin holders, especially those who acquired their coins more than six months ago, have been responsible for a significant amount of the selling pressure in recent days. According to data from Galassnode, this cohort has been selling an average of 25.6K BTC per day, causing the market to absorb the weight of their profits. The selling activity from holders who bought Bitcoin at an average cost basis of $57.9K has accelerated, with many cashing out as Bitcoin rose from $74K to nearly $100K.

The recent profit-taking has added strain to the market, contributing to Bitcoin’s inability to hold its $100,000 level. However, it also highlights an interesting trend: after a prolonged period of soaring prices, many investors who’ve held Bitcoin for a significant amount of time are choosing to lock in profits, taking advantage of the recent peak.

Spot Bitcoin ETFs and Their Role in the Market

One factor helping to absorb some of the selling pressure from long-term Bitcoin holders is the rise of Spot Bitcoin Exchange-Traded Funds (ETFs). Spot Bitcoin ETFs have seen substantial inflows in recent weeks, with over $7 billion flowing into US Bitcoin ETFs after the recent US elections. As a result, the total assets of these ETFs have now surpassed $105 billion, highlighting the growing demand for Bitcoin-based financial products.

Despite this, there have been signs of volatility within the ETF space. On November 25, US Bitcoin spot ETFs experienced a net outflow of $438 million. Among the hardest hit was the Bitwise spot Bitcoin ETF, which saw a significant $280 million in outflows. In contrast, BlackRock’s IBIT ETF posted a net inflow of $267 million on the same day, illustrating a shift in investor preferences within the spot Bitcoin ETF market.

This movement of funds underscores a key aspect of the current market environment: while long-term holders are cashing out, institutional investors are still showing interest in Bitcoin through ETFs, albeit with some fluctuation in fund flows.

Long-Term Holders and the Impact on Bitcoin’s Price Action

Bitcoin’s price movements have long been influenced by the behavior of long-term holders. These investors, who purchased Bitcoin at much lower prices, often choose to hold onto their coins during periods of volatility, hoping to ride out market fluctuations for larger gains down the line. However, the current market seems to be facing a shift, as these same holders appear to be taking profits after the cryptocurrency hit new highs.

As per Galassnode data, Bitcoin holders who have been in possession of their coins for six months to a year have been the most active in selling. These holders, who bought Bitcoin at prices significantly lower than the current market value, have capitalized on the recent rally by selling large volumes of their assets.

• Bitcoin’s price movements continue to be shaped by the actions of long-term holders.
• Selling pressure from these holders reached its highest point since April 2024.
• Institutional involvement in the form of Spot Bitcoin ETFs is providing some support.

The selling activity, especially among those who have held their Bitcoin for extended periods, has led to a short-term pullback in price. But the broader trend of institutional interest, particularly in the form of ETFs, could help buffer the impact of this selling pressure, ensuring that Bitcoin doesn’t see a dramatic downturn.

Spot Bitcoin ETFs: A Glimpse of Institutional Sentiment

Institutional investors have been playing an increasingly large role in Bitcoin’s price movements. Over the past few months, the introduction of Spot Bitcoin ETFs has opened new avenues for large-scale investments in Bitcoin, without the need for directly holding the asset. These ETFs have helped absorb some of the selling pressure from long-term holders, but as seen with recent outflows, market conditions remain volatile.

Bitcoin ETFs have proven to be attractive to investors who wish to gain exposure to the cryptocurrency market without directly buying and managing Bitcoin themselves. However, with Bitcoin’s price action showing signs of weakening, the inflows into these funds could begin to slow down.

The mixed results in the ETF space suggest that investors are closely watching Bitcoin’s price action, waiting for more signs of stability before committing large amounts of capital.

Bitcoin’s recent dip below $93,000 marks a significant moment in its ongoing rally. As long-term holders take profits and Spot Bitcoin ETFs continue to absorb some of the selling pressure, the cryptocurrency’s price could face further challenges in the short term. But with institutional interest still high, the future of Bitcoin remains uncertain yet promising.