Bitcoin has experienced a significant drop of 7.6% after nearly reaching $100,000 on November 22. This drop is the largest since the rally that followed Donald Trump’s U.S. presidential election win. In bull markets, Bitcoin often experiences corrections of up to 20% to 30%, which help balance out the market. One of the reasons Bitcoin didn’t reach $100,000 was due to a substantial amount of profit-taking. On November 21, a record $10.5 billion in profits were taken, marking the most significant profit-taking day in Bitcoin’s history.
A key group influencing the market dynamics are the long-term holders (LTH), individuals who have held Bitcoin for more than 155 days. These investors are known as “smart money” as they tend to buy when prices are low and sell during periods of high market sentiment. Since September 2024, LTHs have sold approximately 549,119 BTC, accounting for around 3.85% of their total holdings. Interestingly, their selling has surpassed the buying activity of entities like MicroStrategy and U.S. spot-listed exchange-traded funds (ETFs).
Looking at previous bull markets in 2017, 2021, and early 2024, a pattern emerges where the percentage drop in Bitcoin’s price decreases with each cycle. In 2017, the drop was 25.3%, in 2021 it was 13.4%, and earlier this year it was 6.51%. Currently, the drop stands at 3.85%. If this trend continues, we could see a further 1.19% drop, equivalent to 163,031 BTC. This would bring the total supply held by long-term investors to 13.54 million BTC. Despite the selling pressure, historical data suggests that long-term investors tend to maintain higher lows and higher highs over time.
James Van Straten, a senior analyst at CoinDesk, provides valuable insights into Bitcoin and the broader macroeconomic landscape. With a background in on-chain analytics and experience at a Swiss hedge fund, James closely monitors ETFs, spot and futures volumes, and flows to gauge Bitcoin’s integration within the financial system. Holding a diverse portfolio including Bitcoin, MicroStrategy, Semler Scientific, and other assets, James’s expertise sheds light on the current market trends and investor behavior.
As Bitcoin continues to navigate through market fluctuations, the actions of long-term holders play a crucial role in shaping price movements and overall market sentiment. By understanding historical patterns and investor behavior, analysts like James Van Straten provide valuable perspectives on Bitcoin’s trajectory and its interaction within the broader financial ecosystem.