Bitcoin (BTC) Market Shows Signs of Strain as Long-Term Holder Selling Accelerates: Glassnode

Long-term Bitcoin holders are cashing out. Data from Glassnode shows a marked acceleration in selling from wallets that have held BTC for over a year—a classic signal of market strain.

Decoding the Exodus

This isn't panic selling from new entrants. This is conviction breaking. When the so-called 'diamond hands'—investors who weathered previous cycles—start moving coins to exchanges, it often precedes a supply shock. Their patience is a finite resource, and the data suggests it's being spent.

The Bull Case for a Shakeout

Paradoxically, this could be healthy. It transfers assets from strong hands to weak ones, flushing out speculative excess and setting a firmer foundation. Every major bull run needs a capitulation phase to reset the board. Consider it the market's version of creative destruction—just ask any traditional finance portfolio manager watching their 'diversified' bonds underperform a meme coin. The old guard is always the last to see the tide turn.

What's next? Watch the exchange inflow metrics. If this selling is absorbed without a catastrophic price drop, it signals robust underlying demand. If not, brace for volatility. The market is testing its mettle.

Bitcoin Stuck in a Fragile Range

According to Glassnode, Bitcoin (BTC) is trading in a fragile zone whereby no side-takers have any reliable momentum. These precarious formations are a function of the increasing realized losses on the network; that is, an increasing share of coins is being sold below their cost basis.

Meanwhile, ETF flows, liquidity depth, and futures positioning have remained relatively muted. Stronger demand inflow, according to the report, is preventing the market from regaining upward momentum.

Long-Term Holder Selling Intensifies

The major concern for Glassnode, however, is the increase in selling from long-term holders-the usually resilient cohorts of bitcoin investors. The data indicates that LTHs have started distributing coins into the market, often an early warning signal during periods of macro uncertainty.

This, combined with the increased spending from holders in the red, points to a cautious environment in which confidence among more experienced participants is thin.

Weak Demand Meets Rising Volatility Expectations

Options markets are already starting to price in short-term volatility ahead of next week’s US Federal Reserve FOMC meeting, despite the slow market conditions. It looks like traders are preparing for macro-driven swings that could break Bitcoin out of its current stagnation.

However, the tone in spot demand is soft, setting up a situation in which volatility will be skewed to the downside unless fresh capital enters.

Liquidity Conditions Still Tight

Glassnode also highlights a decline in liquidity across major trading venues and futures markets. Lower liquidity typically increases price reaction to large orders, making the overall market more susceptible to sharp movements.

Analysts note that BTC will remain under liquidity-driven pressure until either ETF inflows improve or stablecoin liquidity increases.