Bitcoin is facing intensified selling pressure as seasoned investors begin to offload their holdings at a loss, which is creating additional strain on a market already experiencing a downturn.
The current price of Bitcoin remains over 45% below its all-time high, and what initially appeared to be a healthy correction is evolving into a more significant adjustment phase. While much of the volatility has been shouldered by short-term traders, recent data indicates that even long-term holders are feeling the heat.
One significant indicator of this trend is the Long-Term Holder Spent Output Profit Ratio (LTH SOPR). This metric is critical as it tracks whether long-term holders are selling their assets at a profit or loss. Historically, these holders have been the backbone of Bitcoin”s strength, typically choosing to sell only during bullish market conditions. However, the LTH SOPR has recently dipped below the crucial level of 1, currently sitting at 0.88. This drop suggests that, on average, long-term holders are now selling at a loss for the first time since the end of the 2023 bear market. Although the annual average remains at 1.87, this decline indicates a behavioral shift among these investors, who are now locking in losses rather than holding out for a recovery.
In conjunction with this, on-chain data reveals a marked increase in Bitcoin inflows from long-term holders to Binance. Recent trading sessions have shown daily inflows reaching approximately double the annual average, with several spikes indicating a surge in activity. This uptick is significant; Binance”s deep liquidity is often favored by large investors for executing substantial transactions. The increased inflows from long-term holders are generally associated with either preparation for selling or a realignment of their positions. This pattern has been visible since the last all-time high but has become more pronounced in recent weeks.
The selling activity is further corroborated by ownership data, which shows that over the last two years, retail investors have sold more than 1.2 million BTC, accounting for over 6% of the circulating supply. As retail participants reduce their exposure, institutional vehicles, including ETFs and public companies, have been actively acquiring a significant portion of this supply. This structural redistribution is altering the market”s composition, leading to changes in volatility dynamics and liquidity flows.
The combination of the LTH SOPR dipping below 1 and the heightened inflows to Binance paints a concerning picture for the market. When historically stable holders start to realize losses and simultaneously transfer coins to exchanges, it often signals an impending increase in volatility. While this does not guarantee further declines, it indicates that the market correction is moving into an adjustment phase. If this trend continues, Bitcoin could remain under pressure in the short to medium term, as the supply from experienced holders adds to an already cautious market environment.
It is essential for traders and investors to monitor these developments closely, as they could have significant implications for market dynamics going forward.
