The Bitcoin (BTC) price has taken a significant hit, dropping 7.6% since it almost reached the psychological barrier of $100,000 on November 22nd. This decline is the largest since Donald Trump won the U.S. presidential election in 2016, which sparked a rally that propelled the largest cryptocurrency by market capitalization to a record high.
A Correction in Line with Historical Trends
While the drop may seem alarming, it’s not entirely out of the ordinary. In bull markets, Bitcoin typically experiences corrections of up to 20% or even 30%. These corrections serve as a natural process to flush out leverage in an overheated market.
Profit-Taking on a Record Scale
A significant portion of the reason for the price decline lies in profit-taking. A record dollar value of $10.5 billion in profit-taking took place on November 21st, according to Glassnode data. This is the largest day of profit-taking ever witnessed in Bitcoin.
The Role of Long-Term Holders (LTH)
At the heart of this action are the long-term holders (LTH), a group defined by Glassnode as having held their Bitcoin for more than 155 days. These investors are considered "smart money" because they tend to buy when the BTC price is depressed and sell in times of greed or euphoria.
LTH Sales Outpace Buying from Institutions
From September to November, these LTH investors have sold 549,119 BTC, approximately 3.85% of their holdings. Their sales have accelerated since October, even surpassing buying activity from notable entities like MicroStrategy (MSTR) and U.S.-listed exchange-traded funds (ETFs).
How Long Will Selling Pressure Last?
One question remains: how long will this selling pressure continue? Looking at patterns in previous bull markets in 2017, 2021, and early 2024, it’s noticeable that the percentage drop gets smaller each cycle.
- In 2017, the percentage drop was 25.3%
- In 2021, it reached 13.4%
- Earlier this year, it was 6.51%
- Currently, it stands at 3.85%
If this trend of decline continues, that would see another 1.19% drop or 163,031 BTC, taking the cohort’s supply to 13.54 million BTC.
Higher Lows and Higher Highs: A Trend in Line with Expectations
Each time, the long-term investors’ supply makes higher lows and higher highs, which is consistent with this trend.
