Bitcoin (BTC)’s recent price rise above $100,000 coincides with a sharp decline in supply held by long-term holders. This means that some of the most seasoned Bitcoin investors in the market are posting record profits as BTC price rises towards the six-figure milestone.
Realized profits from Bitcoin long positions hit an all-time high.
The chart below shows companies that have held Bitcoin for more than 155 days as long-term holders (LTHs). Their behavior can often reflect changes in market sentiment.
As of December 19, the supply of Bitcoin LTH had fallen to $13.31 billion, compared to a local high of about $14.23 billion two months ago, according to Glassnode data.
During the same period, the price of BTC rose from around $58,000 to over $100,000, indicating that LTH sold its holdings at local highs.
This is the total Bitcoin supply held by LTH. Source: Glassnode
Bitcoin’s upward trend above $100,000 is not over yet.
Short-term Bitcoin holders (STH) have stepped up to absorb selling pressure from long-term holders.
Notably, the decline in LTH supply coincided with an increase in the supply of Bitcoin held by STH. STH’s ability to absorb this selling pressure likely played a key role in maintaining Bitcoin’s price momentum above $100,000.
This is the total supply of Bitcoin held by STH. Source: Glassnode
“The proportion of wealth held by these new investors has not yet reached the highs experienced at the peak of previous ATH cycles,” Glassnode analysts UkuriaOC and CryptoVizArt added in their weekly report.
“The interpretation here is that the market may not have reached the levels of speculator euphoria and saturation seen in previous cycles.”
Bitcoin realized a 24-hour-3-month HODL wave of BTC holders. Source: Glassnode
Another useful indicator to evaluate market conditions is the Actual Market Deviation (AVIV Ratio). It measures the average unrealized or paper profit held by active investors.
Based on the profitability of the participants, this ratio helps determine whether the market is overextended or whether there is still room to operate.
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Historically, bull markets tend to peak when nearly every category of investor achieves significant returns. This scenario often results in overwhelming sell-side pressure as new buyers are hesitant to enter at high prices while investors lock in profits.
The extreme band of the AVIV ratio, defined as +3 standard deviations (σ), typically indicates overheating conditions. As of December 19, it remains at 1.81, well below the extreme band of the +3σ (2.3) band.
Bitcoin AVIV rate is the best. Source: Glassnode
This means that profits are growing, but the market has not yet reached an unsustainable level of euphoria. Therefore, Bitcoin may continue to rise to higher levels before profit-taking and falling demand trigger a real market reversal.
Bitfinex said Bitcoin price declines will be minimal.
Analysts at the Bitfinex exchange expect a mild Bitcoin correction in the coming months, saying rising institutional demand could eventually push the price of BTC to $145,000 by mid-2025, or $200,000 in a best-case scenario.
As of December 19, Bitcoin exchange-traded funds (ETFs) currently had just over $37 billion in assets under management, compared to $24.23 billion in early November, according to Farside Investors data.
Bitcoin ETF cumulative net flow. Source: Farside Investors
Meanwhile, speculation is growing in the cryptocurrency industry about the possibility of the incoming Trump administration securing strategic Bitcoin reserves for the United States, which could push the price to $800,000 by the end of 2025.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.