Bitcoin's long-term holders (LTHs) have started to sell after continued accumulation for months, which could indicate a new phase in the market. Several on-chain metrics suggest Bitcoin could be entering conditions more commonly seen near market bottoms despite profit-taking by seasoned investors, which is likely to create short-term selling pressure.
On-chain data revealed LTH supply recently started declining after climbing close to 16 million BTC, while the supply of LTHs in short-term holding periods is comparatively low. Historically, after extended price rallies, long-term investors have sold part of their holdings, allowing new investors to enter the market.
The LTH/STH SOPR (Spent Output Profit Ratio) has moved closer to 1, which suggests that profits of the long-term holders and short-term holders are closing in.
Historically, this occurred in 2015, 2019, and 2022, with selling pressure easing slowly over time and accumulation resuming. The ratio has not yet entered its traditional accumulation zone, but current readings suggest that the market is heading further towards the accumulation zone.
This cycle of development is also unique from previous cycles. Bitcoin's first big price increase of the current cycle took around 31 months to reach, much longer than past cycles, which took between 8 and 17 months. The increased timeline implies that investor behavior has changed over time in line with the rising institutionalization.
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LTH supply recently started declining after climbing close to 16 million BTC. Today, the Crypto Fear & Greed Index is at 40, indicating that the market is currently in Neutral territory, and Bitcoin's Market Value to Realized Value (MVRV) ratio has been squeezed to the 1.21-1.22 zone.
In the past, when the sentiment was negative and on-chain fundamentals were getting better, new accumulation phases have started. Meanwhile, long-term investors' supply is also near record levels, suggesting that established investors are holding on to most of their Bitcoin after recent distributions.
Although no single indicator can accurately identify a market bottom, the combination of record long-term holder conviction, compressed valuations, subdued speculative activity and cautious investor sentiment increasingly resembles conditions seen before previous BTC recoveries.
In the short term, Bitcoin seems to be moving from distribution to what could be an accumulation phase. Whether or not this will be the bottom of the cycle will be dependent on overall macroeconomic conditions and investor demand, as well as the market's capacity to absorb the continued selling pressure from long-term investors.