Key takeaways
Why is Bitcoin under intense selling pressure right now?
Long-term holders are aggressively taking profits, while ETF demand has sharply declined.
What could help Bitcoin rebound from its current downtrend?
If short-term holders absorb the sell-off, BTC could recover toward the $111k cost basis.
Bitcoin [BTC] has experienced intense downward pressure, hitting a three-week low of $108,652.
In fact, at the time of writing, Bitcoin was trading at $109,027, marking a 2.6% drop on the daily charts and a 6.44% drop on the weekly charts.
Amid this sustained downtrend, Bitcoin holders, especially long-term holders, have turned to aggressive profit-taking.
Bitcoin LTHs took 3.4M BTC in profit
After the recent FOMC meeting led to a 25 bps cut, Bitcoin briefly rallied to $117k. However, the market soon shifted into a correction phase, driven by profit-taking from long-term holders and declining demand from ETFs.
Source: Checkonchain
As a result, LTHs’ Sell Side Risk jumped to 0.0017, according to Checkonchain data, reflecting LTHs’ increased urge to sell.
According to Glassnode, in this cycle, Bitcoin long-term holders have realized 3.4 BTC in profit, outpacing other cycles, indicating cohort maturity and strength of capital rotation.
Source: Glassnode
Since the FOMC meeting, LTH has realized 63.8k BTC in profit, currently sitting at a three-week-high.
Such a spike in realized profit among the cohort indicates that this cycle has proven highly profitable for LTHs. Thus, as the price movement to the downside became stubborn, LTHs chose to lock in their gains.
LTH dominance fades
As a result of increased profit taking, long-term holders are no longer a dormant player in the market; a declining RHODL Ratio evidences this fact.
Source: Checkonchain
Thus, their share of value is now being overtaken by new market entrants. Historically, this is typical of mid-to-late bull market cycles, where LTH gradually takes profit and passes coins to STHs.
ETF demand collapses
According to Glassnode, the Bitcoin downtrend has held strong not only because of LTHs, but also due to the lack of institutional demand —a pair that has dominated the market this cycle.
Source: Glassnode
ETF Netflows (7D-SMA) have plunged from 2.6k BTC per day to nearly zero. As of press time, Daily Net Inflow stood at -2.24k BTC, indicating that outflows from ETFs now exceed inflows.
This surge in selling pressure, combined with waning institutional demand, has created a fragile market environment and contributed to Bitcoin’s recent weakness.
What next for BTC?
According to AMBCrypto’s analysis, Bitcoin is facing intense downward pressure as LTHs turn to aggressive profit-taking while ETF demand has faded.
These market conditions have set the stage for potentially more losses on BTC price charts. Therefore, if the market conditions persist, BTC risks a dip to $107,314.
However, if STH absorbs the market shock as capital rotates from LTH, any demand will provide BTC a significant foundation and help a rebound towards STH’s cost basis around $111k.