Bitcoin Long-Term Holders Begin Selling as On-Chain Indicators Signal Approaching Accumulation Zone

Bitcoin [$BTC] long-term holders (LTHs) — defined on-chain as investors who have held their coins for at least 155 days — are beginning to shift their behavior after accumulating at record levels, a move that signals a possible transition in the current market cycle.

LTH supply recently turned lower after climbing toward 16 million BTC, representing roughly 80% of Bitcoin's approximately 19.8 million mined supply, while short-term holder (STH) supply has remained comparatively subdued. This pattern echoes previous cycles of LTH supply curves, in which experienced investors gradually sell portions of their holdings as prices rise.

However, the current cycle has unfolded differently in several respects. The first major price run-up lasted approximately 31 months, compared to 8, 17, and 16 months in prior cycles. Sustained ETF inflows following the January 2024 approval of spot Bitcoin ETFs, institutional participation, and persistent whale accumulation likely delayed the redistribution phase. Even so, LTH supply remains near historical highs, suggesting that profit-taking has only just begun. The data indicates long-term holders are once again acting as active market participants, marking the cycle's transition into its second distribution phase.

LTH/STH SOPR Ratio Reinforces the Trend

Complementing the shift in long-term holder behavior, the LTH/STH SOPR Ratio — which compares the Spent Output Profit Ratio of long-term versus short-term holders to gauge which cohort is realizing profits relative to the other — has fallen to approximately 1, providing an additional lens through which to assess the market's current position.

The narrowing profitability gap between long- and short-term holders mirrors conditions observed around the 2015, 2019, and 2022 market bottoms, when capitulation and redistribution gradually gave way to renewed accumulation. This reinforces the recent slowdown in the rate of supply flowing from LTHs and suggests that fewer speculative positions remain in the market.

That said, the ratio has not yet fully entered its historical accumulation zone. Rather, Bitcoin appears to be approaching a region where accumulation, redistribution, and renewed demand have historically begun shaping the next stage of the market cycle.

Market Sentiment Diverges from On-Chain Signals

Broader market sentiment has yet to reflect improving on-chain conditions. The Crypto Fear & Greed Index remains in "Fear" territory at a reading of 27, indicating that investors continue to approach Bitcoin cautiously despite strengthening blockchain fundamentals.

This caution stands in contrast to the supply held by LTHs, which remains near a record 16 million BTC. Additionally, the MVRV (Market Value to Realized Value) ratio — which compares Bitcoin's market capitalization to the aggregate cost basis of all coins — was compressing toward a range of 1.21 to 1.22 at press time.

Historically, fear has often lingered while on-chain fundamentals quietly improved, and the current divergence is more notable than contradictory. A single indicator alone does not confirm a market bottom. Nevertheless, the convergence of restrained profitability, compressed valuations, strong long-term holder conviction, and persistent fear increasingly resembles conditions that preceded previous Bitcoin accumulation phases.

Key Takeaways

Long-term holders have begun distributing Bitcoin after a period of record accumulation, signaling that the market is entering a new cycle phase. On-chain indicators are increasingly aligning with historical accumulation conditions, even as broader market sentiment remains firmly rooted in fear.

Source: CryptoNews | AMBCrypto