Bitcoin Sellers Identified by On-Chain Analysis: Key Investors Revealed
In the world of cryptocurrency, the spot market has been identified as a key driver of Bitcoin's recent rally, according to Avocado_onchain, a contributor to CryptoQuant. Earlier, Avocado_onchain had pointed to signs of Bitcoin's rally continuation.
The decline in older Bitcoin sales in December suggests that many long-term holders may be anticipating even higher prices. According to Yonsei_dent's observations, holders who have kept their coins for over a year sold relatively little during the period in question. The Binary CDD metric on the chart showed a decline in older Bitcoin sales in December compared to November.
This group of investors, who are most likely those who purchased Bitcoin during the approval and launch of spot ETFs in the U.S. around November and December, can be attributed primarily to profit-taking behavior following significant price appreciation and inflows into these ETFs during that period.
Several factors contributed to this phenomenon. The surge in ETF inflows and rapid accumulation of assets, such as BlackRock’s Bitcoin ETF (IBIT) quickly amassing over $1 billion of assets in its first days and surpassing BlackRock’s gold fund by November, created a strong demand that likely pushed Bitcoin prices higher. By December, IBIT hit $50 billion assets under management faster than any other ETF in history.
The price appreciation following ETF launches, coinciding with Bitcoin reaching new highs, would motivate some early ETF investors to sell part or all of their holdings to lock in profits. The SEC’s approval of options on Bitcoin ETFs with increased position limits in November 2024 reduced Bitcoin’s volatility, making it more attractive for institutional investors seeking balanced risk exposure. However, lower volatility can also stimulate selling as volatility-related yield opportunities diminish, encouraging profit-taking among active participants originally attracted by the launch hype.
The initial excitement around spot Bitcoin ETFs attracted buyers who purchased during the approval and launch phase anticipating price gains. As these gains materialized, the most active sellers emerged from this group, as they were likely the initial entrants driving demand and price spikes. Subsequent developments such as SEC delaying decisions on other crypto ETFs reinforced that the big event window was during the Bitcoin ETF launches, concentrating active trading within those cohorts.
In summary, the confluence of massive capital inflows, rapid asset accumulation by ETFs, a sharp rise in Bitcoin’s price, and evolving market dynamics around volatility and institutional participation caused the most active Bitcoin sellers to be those who bought during the U.S. spot Bitcoin ETF approval and launch phases in November-December 2024. This reflects a common market cycle where early entrants in new financial products capitalize on initial enthusiasm and then strategically exit positions to secure profits.
As of writing, Bitcoin is trading around $96,000. However, it has dropped 2.5% in the last 24 hours, according to CoinGecko. The analyst did not provide any specific predictions about future Bitcoin prices. The Spent Output Age Bands (SOAB) indicator provides insights into Bitcoin sales by investors, offering a breakdown by holding periods. The most active Bitcoin sellers had a holding period of six to 12 months, as indicated by the orange band on the chart.
The surge in ETF inflows and rapid asset accumulation, such as BlackRock’s Bitcoin ETF (IBIT), has created a strong demand that likely pushed Bitcoin prices higher, making it a key factor in Bitcoin's recent rally. As a result, the most active Bitcoin sellers have been those who purchased Bitcoin during the U.S. spot Bitcoin ETF approval and launch phases in November-December, as they aim to secure profits from their investing ventures in the dynamic world of technology and finance.
