Introduction
With Bitcoin reaching $100K after a meteoric rise from $44K in just a year, long-term HODLers (LTHs) are cashing out, locking in massive gains. The question is: Does this signal a problem, or is it a sign of market maturity?
LTHs Reduce Bitcoin Holdings
One year ago, long-term HODLers held 13.84 million BTC at an average price of $42K. Today, their holdings have dropped to 12.22 million BTC—a sharp 11% decline. These investors, known for buying during downturns, seem to be changing their strategy. Back in 2023, Bitcoin started at $16.6K, and LTH wallets held 14.93 million BTC.
By the end of the year, Bitcoin rose to $44K, and LTH holdings increased to 15.85 million. Their steady accumulation fueled the rise. But in 2024, the pattern shifted. LTHs began offloading Bitcoin aggressively, reducing their holdings from 15.8 million to 14.27 million BTC in Q4 alone. The surge from the “Trump trade” presented a lucrative exit opportunity, and these HODLers took it. After Bitcoin’s massive 502% price surge over two years, it’s no surprise that many are now selling to secure profits. With Bitcoin increasingly influenced by macroeconomic trends, this behavior aligns with rational market moves.
Market Maturity or Warning Sign?
LTHs typically follow a contrarian strategy—buying when others sell. Their recent exit, however, raises critical questions. Does it signify market maturity or a potential red flag for Bitcoin? BTC recently dipped to $89K, the lowest since mid-November, before bouncing back to $95K. Big institutions like MicroStrategy have been stepping in to absorb selling pressure. For instance, in the first two weeks of 2025, MicroStrategy purchased 2,530 BTC worth $243 million, helping stabilize BTC’s price.
This shows LTHs remain opportunistic, buying during dips and selling during peaks. But as BTC’s supply tightens, their profits are diminishing.
Declining SOPR Signals a Shift
Bitcoin’s Long-Term Holder SOPR (Spent Output Profit Ratio) reveals a trend of shrinking returns. Back in 2013, the average LTH SOPR stood at 9.72, but by 2021, it had dropped to 3.87. Analysts expect it to decline further to 2.44 by 2025. This puts LTHs in a challenging position. To maintain their profit levels, they must either accumulate more BTC or sell earlier to avoid even tighter returns. Many are choosing the latter, adding pressure to the market.
What Lies Ahead for Bitcoin?
The responsibility of stabilizing the market now lies with big players. To counter the selling pressure from LTHs, these institutional investors must step up. A supply shock could reignite upward momentum, but without it, BTC may face increased volatility.
