Bitcoin (BTC) is tempting selling to “diamond hands” as an analyst warns that institutional buying is essential to protect a BTC price breakout.
Long-term holders (LTHs) have started reducing their BTC exposure, according to data from on-chain analytics firm Glassnode.
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Glassnode, which tracks 30-day net position changes among LTH companies, now shows an accelerating sales trend.
LTH is a wallet that stores a specific amount of BTC for at least 155 days and falls on the less speculative end of the Bitcoin investor spectrum. Over the past six months, accumulated LTH has converted into net selling.
On November 20, the decrease in LTH net position amounted to 245,000 BTC compared to the previous 30 days. This is the largest 30-day decline since April.
Bitcoin LTH net position change. Source: Glassnode
In response, cryptocurrency analyst Miles Deutscher suggested that only massive buying pressure could meaningfully counter the LTH trend. At the top of the list is the US spot Bitcoin exchange-traded fund (ETF).
“ETF flows must remain strong or long-term holder selling pressure could overtake the market,” he warned in the X post.
US spot Bitcoin ETF Netflow (screenshot). Source: Farside Investors
ETFs have seen record net inflows over the past month, and the industry has become more active this week with the start of options trading.
Data from UK-based investment firm Farside Investors showed net inflows of more than $770 million on November 20.
Nonetheless, the chart attached to Deutscher’s post showed even these highlighted inflows struggling to match LTH activity.
Bitcoin LTH vs. ETF net position change. Source: Miles Deutscher/X
Bitcoin investors are enjoying “significant” unrealized profits.
Glassnode went on to acknowledge that Bitcoin holders of all stripes are now firmly in the black and that supply dynamics are prone to change as a result.
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“As market investors become more profitable, there is a high potential for new sell-side pressure,” he wrote in the latest edition of the weekly newsletter ‘The Week Onchain’, published on November 20.
Researchers highlighted the market-to-realized value (MVRV) indicator, which is roughly on par with Bitcoin’s previous high of $73,800 last March.
“Bitcoin price recently crossed the +1σ band located at $89.5k,” they commented on the realized price deviation.
“This is a sign that investors are currently holding statistically significant unrealized profits, indicating an increased likelihood of profit-taking activity.”
Bitcoin MVRV extreme deviation price bands (screenshot). Source: Glassnode
Glassnode added that cryptocurrency bull markets often experience prolonged phases of “overheated” indicators.
“Nevertheless, markets have historically remained overheated for long periods of time, especially when supported by capital inflows large enough to absorb sell-side pressure,” he concluded.
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.