Bitcoin sell-off activity stems from long-term holders selling their coins gradually, according to Bitcoin Fidelity data from Fidelity Digital Assets. Chris Kuiper, vice president of research at Fidelity’s digital asset arm, identified that long-term holders who held their coins for a year or more are actually the primary source of the sell-off, while institutional demand provides market support right now.
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How Long-Term Bitcoin Holders And Institutional Demand Drive Sell-Off
Long-Term Holders Lead the Selling
Long-term Bitcoin holders are selling slowly over time based on the Bitcoin Fidelity analysis, which indicates there’s no real panic in the market at the time of writing. These long-term Bitcoin holders expected a massive rally in October or November based on historical price patterns, but the rally failed to materialize, and this led to frustration and the current Bitcoin sell-off.
Many holders are now tempted to lock in profits earlier than planned, which contributes to the Bitcoin sell-off pressure that Fidelity researchers have documented. The selling has been happening gradually, and it’s being driven mainly by year-end considerations.
Kuiper stated:
“But as October’s strong seasonal pattern didn’t hold up and the calendar year is coming to a close, long-term holders are looking to make year-end tax and positional changes, calling it a day with the gains they already have.”
Institutional Demand Absorbs the Selling Pressure
Despite the Bitcoin sell-off from long-term holders, substantial institutional Bitcoin demand from investors, ETFs, and corporations continues to support prices right now. This institutional Bitcoin demand has been strong enough to absorb much of the selling pressure, and it’s helping to keep the market relatively stable.
Bloomberg’s Eric Balchunas noted that Bitcoin ETFs attracted more than $500 million worth of inflows on Wednesday, which shows robust institutional Bitcoin demand even during the Bitcoin sell-off. The Bitcoin Fidelity data reveals that positive fundamental developments and lackluster price action continue to diverge, according to the analyst.
Recent Buyers Also Add to Selling
Along with long-term holders, some recent buyers have also contributed to the Bitcoin sell-off. Samson Mow blamed recent buyers for selling to secure returns after the cryptocurrency underperformed earlier this year. This group rushed to sell BTC due to reports of original holders dumping their positions, and this added to the Bitcoin sell-off pressure revealed in the Bitcoin Fidelity analysis.
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