It's time to take profits.
Introduction:
In this post I give my opinion, shaped by several articles I have read, and videos I have listened to, and I believe the narrative, that longterm bitcoin holders are selling their bitcoin to take profit, and they couldn't sell their bitcoin before, because there wasn't enough liquidity. But now that their are institutional bitcoin investors, bitcoin treasuries and other large investors, the liquidity exists to sell large amounts of bitcoin and that's what the blockchain analytics show; large bitcoin wallets selling millions and even billions of dollars worth of bitcoin. And based on what I have read and heard, this opinion is based on blockchain data, which shows wallets which have held bitcoin for 5-12 years, are now selling their bitcoin. Because bitcoin is only pseudoanonymous. We can see the wallets on the blockchain and we can see when they bought and how long they have been holding. This is the transparency of the bitcoin blockchain.
Ocums Razor: the simplest answer is usually right.
*Occam's razor is a problem-solving principle stating that the simplest explanation for a phenomenon is usually the correct one, and that one should not multiply entities or causes without necessity. The principle recommends choosing the explanation with the fewest assumptions when faced with two competing hypotheses. *
I am a believer that the simplest explaination is usually right. So that's why I believe the narrative that Big owners of Bitcoin, sometimes called "whales," have been selling their Bitcoin since July. These are the "smart money" people who bought their Bitcoin many years ago.
The details of this sell-off which you can learn from blockchain explorers.
You can estimate the age of a Bitcoin wallet by looking up its public address on a blockchain explorer and checking the timestamps of its first transactions. To determine this, find a transaction history for an address you want to research, copy the address, and paste it into a blockchain explorer tool. By looking at the date of the first transaction associated with that address, you can tell how old the wallet is and how it has been used over time.
So with those skills you can find the following:
- Lots of Selling: Since July, these long-term Bitcoin owners have sold over 470,000 Bitcoin. That's a huge amount of money, more than 49 billion dollars!
- Old Coins Moving: Most of these coins hadn't moved in a very long time—some for 7 to 10 years, and others for over 10 years.
- Selling at Any Price: Normally, these big owners sell their Bitcoin when the price is very high (at a "peak"). But now, they are selling their coins at any price, and this is why the Bitcoin price has stayed low.
Bitcoin has many things going for it right now:
- The government is more friendly to digital money.
- New, clear rules are being made for digital money.
- The government is not holding money as tightly as before.
Why Are the Whales Selling Now?
The reason the big owners are selling is simple: They are taking their profits.
- Time to Cash Out: Any investment must eventually reach a point where the first people who believed in it take out their earnings. For example, an investor who was brave enough to buy Bitcoin back in 2011 (14 years ago) now has coins worth over 9 billion dollars! It makes sense for them to sell some and put their money into other things.
- The Market is Ready: The big reason this is happening now is that the market is finally big enough to handle the sales. If they tried to sell this much Bitcoin a few years ago, the price would have crashed by 80%.
- New Buyers: Now, we have new types of big buyers, like investment funds (ETFs) and companies. These new buyers are seen as safer and can handle less risk than the early investors.
This massive selling is actually a healthy sign because:
- Coins are Moving to Stable Hands: The Bitcoin is moving from a small number of early investors to many stable institutions. This is making the price swings (volatility) of Bitcoin much lower, which is perfect for new, larger investors.
- It's Like a Company Going Public (an IPO): When a company like Facebook or Robin Hood first sells shares to the public, the early owners often sell a lot of their shares. This makes the stock price drop at first, but it is a necessary change. It moves the company from a few "insiders" to millions of public owners. Later, the stock price usually grows much bigger.
- Like Gold: When it became easy to buy gold using investment funds (like the GLD ETF in 2004), the price of gold went up a lot over the next 7 years because many more people could own it.
Why This is Not a Scary Time
This is not a scary "bear market" where people lose faith in Bitcoin. The data shows:
- Old Wallets are Selling, New Funds are Buying: The sales are coming from old accounts, and the buying is coming from new investment funds and companies.
- Bitcoin is Stronger Than Ever: People are not losing faith in Bitcoin. Instead, more people are accepting it, more people are using it, and the new government rules are helpful for Bitcoin.
Last words... two points.
I think early bitcoin investors, like all early investors, are taking a profit. It is the nature of and the real reason p[eople make investments; to make profits.
I believes that once the early investors finish selling and the new buyers have bought all they need, the Bitcoin price will start to climb just like those companies after their first sales to the public.
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🙋♂️ Author: Shortsegments
This post was written by @Shortsegments, an author who has been covering cryptocurrency, blockchain technology, decentralized finance, Bitcoin, Ethereum, and digital ledgers for seven years.
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Well written article and it was interesting when you mentioned the above..
It makes sense that old Bitcoin holders are taking profits now, especially with more liquidity in the market. If institutions are buying these coins, it could make the market more stable in the long run. Thanks for breaking it down in an easy way.
This is a very compelling and well-researched argument. The data about long-term wallets distributing is undeniable and a crucial piece of the market puzzle. Thank you for laying it out so clearly.
However, this is only one side of the liquidity equation. The other side is the massive, structural demand from the new Spot Bitcoin ETFs, which are absorbing this sell-side pressure. The key question isn't just 'Are old hands selling?' but 'Is the new, institutional demand strong enough to absorb it and continue establishing a higher price floor?
This is the fundamental market dynamic playing out right now. The selling you've highlighted provides the liquidity for the trillion-dollar traditional finance world to build positions. It's a transfer of ownership, not necessarily a bearish signal in isolation. A fascinating time to be an investor.
I actually think one of the things really affecting a lot of whales is the fact that they are having fear of missing out
It's more of a structural change, newer buyers taking the place of old sellers. Part of me doesn't see it much as a good sign, since my mind akins it to founder(s) exiting the company for new management lol.