Bitcoin Drops 4% as Long-Term Holders Sell 815K BTC

Bitcoin’s bullish outlook deteriorated significantly as the cryptocurrency dropped below $99,000 after shedding nearly 4% from Thursday’s intraday high of $103,690, according to CoinGecko data. This decline mirrored a broader risk-off sentiment across traditional markets, with the Nasdaq falling approximately 2% in parallel movement. Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, told Decrypt that investors are digesting the fallout from the U.S. government reopening after its longest shutdown, with the funding bill offering only a short-term reprieve.

The market reaction reflects growing concerns about economic damage already done during the government closure. McMillin explained that investors are focusing on weeks of missing economic data, a federal statistical system described as “permanently damaged,” and the White House’s confirmation that October’s jobs report will be released without the unemployment rate. This uncertainty has created a challenging environment for risk assets, with Bitcoin’s correlation to traditional market movements becoming increasingly apparent.

Compounding the macroeconomic pressure is the accelerated distribution from Bitcoin’s long-term holders, according to a Glassnode report released Thursday. The 30-day change in supply held by long-term holders, which was already in negative territory, is falling sharply, indicating these investors are “accelerating their distribution.” CryptoQuant analysts noted in a separate Thursday report that long-term holder selling hit one of the highest levels so far this year as prices reached new highs, coinciding with contracting demand.

These investors have sold approximately 815,000 BTC over the past month, increasing selling pressure to the highest level since January 2024. The timing of this accelerated selling is particularly significant as it occurs during a period of weakened spot demand. CryptoQuant analysts explained that this comes amid net spot Bitcoin exchange-traded fund outflows, reduced U.S. buying pressure shown by a negative Coinbase premium, and a broader contraction in apparent demand across markets.

The absence of meaningful bid support has exacerbated the selling pressure from long-term holders. Charlie Shery, head of finance at Australian crypto exchange BTC Markets, told Decrypt that while whale selling in isolation isn’t usually significant, what makes the current situation notable is “the lack of meaningful bid support on the buy side to absorb that selling.” This represents a significant shift from earlier market dynamics where institutional buyers provided consistent demand.

Shery added that “earlier in the cycle, ETFs and MicroStrategy were providing steady demand” but noted that “without those buyers, the recent sell-heavy flow appears to be driving the steady decline in Bitcoin we have seen.” The weakening institutional appetite is reflected in multiple indicators, including spot Bitcoin ETF outflows and Coinbase’s premium turning negative, suggesting reduced U.S. buying pressure at current price levels.

Market sentiment has shifted noticeably as participants reassess Bitcoin’s near-term prospects. Users on prediction market Myriad, owned by Decrypt’s parent company Dastan, have assigned a 56% chance of Bitcoin hitting $115,000 before $85,000, down significantly from Wednesday’s 68% probability. This decline in bullish sentiment reflects growing concerns about the sustainability of current price levels amid the selling pressure and weakening demand.

McMillin noted that Bitcoin’s range trading since early August could end if the $98,000 level fails to hold, suggesting the cryptocurrency could drop lower into the $90,000 territory, similar to what occurred in June. “The market is really looking for certainty to gain strength, but it is not clear where that is going to come from right now,” McMillin said, highlighting the challenging environment facing cryptocurrency investors as they navigate both macroeconomic uncertainty and shifting market dynamics within the digital asset space.