Bitcoin long-term holdings hit an 8-month low—has the market shifted?

Author: Nancy Lubale Source: cointelegraph Translation: Shan Oba,

Bitcoin long-term holders continue to reduce their holdings, with their positions dropping to the lowest level since April.

Key Points

1. The proportion of bitcoin held by long-term holders has dropped to 72%, the lowest since April

2. If key support levels are lost, bitcoin price may see a deep correction to $68,500

Bitcoin Long-Term Holders’ Positions Fall Back to April Levels

According to Glassnode data, the amount of bitcoin held by long-term holders (entities holding for at least 155 days) has decreased from 14.8 million in mid-July to 14.3 million in December.

As shown in the chart below, the proportion of holdings by these investors has dropped to 71.92%, which is on par with the level in April.

Looking back at April, bitcoin price fell from the all-time high of $109,000 set on January 20, dropping to a low of $74,000. At that time, long-term holders seized the opportunity to accumulate at low prices, pushing the proportion of holdings up to 76% in July, which in turn helped bitcoin price surge by 65% to a new all-time high of $123,000.

If history repeats itself, long-term holders may see this drop of bitcoin to $84,000 as a good opportunity to increase their positions, potentially driving the price to a new all-time high in the coming months.

Proportion of bitcoin held by long-term holders. Data source: Capriole Investments

From a historical cycle perspective, the proportion of holdings by long-term holders usually drops sharply during periods when the market is dominated by retail investors, and is often accompanied by selling from long-term holders at the peak of bull cycles. Similar situations occurred in the bull markets of 2017 and 2021.

CryptoQuant data further shows that, based on a 30-day rolling period, long-term holders reduced their holdings by 1.1 million bitcoin on November 26, marking the second largest single-day reduction in history.

As of Monday, long-term holders have reduced their holdings by 761,000 bitcoin over the past 30 days, indicating that as concerns about further price declines intensify, these investors are gradually cutting their losses and exiting the market.

Bitcoin 30-day rolling period long-term holder position changes. Data source: CryptoQuant

According to previous reports by Cointelegraph, over the past 30 days, crypto whales have sold a total of $2.78 billion worth of bitcoin, continuing to exert downward pressure on the price.

Can Bitcoin Hold the $70,000 Level?

After losing support at the 50-week moving average (MA) and the annual opening price of $93,300, bitcoin's technical outlook has weakened.

As shown in the chart below, the BTC/USD exchange rate broke below the lower edge of the bear flag pattern at $92,000 last Friday, confirming the formation of this pattern.

The primary support zone currently being watched by the market lies between the local low of $83,800 set on December 1 and the multi-month low of $80,500 reached on November 21.

If this support zone is breached, bitcoin price may see a further deep correction to the measured target of the flag pattern at $68,500, which is also supported by the 200-week moving average. This drop would represent a 20% retracement from the current price.

BTC/USD daily chart. Data source: Cointelegraph/TradingView

Analyst Nic posted on social platform X on Tuesday: “Bitcoin has once again fallen below a key level, confirming the bear flag pattern.” He added that the next potential support is the 100-week exponential moving average at $85,500.

The analyst further stated: “If this support fails, the market will test key on-chain support levels such as $83,800 (ETF cost basis) and $81,200 (actual market average), before finally reaching the $80,000 mark.”

According to Cointelegraph, the 20-day exponential moving average has started to turn downward, and the relative strength index (RSI) is in negative territory, both signals indicating that the market is currently dominated by bears.