Since mid-July, bitcoin's (BTC) ascent has slowed above $120,000. Prices hit a new high of $124,157 early Thursday but have since pulled back to $123,000, lacking momentum. This raises a question: who is cashing out of bitcoin and adding selling pressure to the market? According to observers, the answer lies in blockchain data, which shows old wallets have been liquidating their holdings. "It may be linked to concentrated selling pressure from long-term holders who have recently accelerated their selling," Gabriel Halm, senior blockchain analyst at Sentora, told CoinDesk. "Historically, long-term holders’ selling phases are cleanly defined within the bitcoin cycle. This time, however, accumulation during Q2’s pullback has given way to renewed selling, suggesting the market’s structure may be shifting." The supply of BTC controlled by long-term holders or wallets with a history of owning coins for 155 days or more has declined by over 300,000 BTC in four weeks, according to data source Bitcoin Magazine. Several dormant wallets, inactive for over a decade, have become active in the past four weeks, moving coins on-chain for the first time in years, possibly in profit-taking operations. Blockchain analytics firm Glassnode stated last week that profit-taking by long-term holders continues, albeit at a slower rate than in July. "$BTC profit realization by long-term holders (7D SMA) has slowed in August after a July run consistently above $1B/day - one of the largest profit-taking periods on record," Glassnode said on X . Sam Gaer, chief investment officer of Monarq Asset Management's Directional Fund, stated that the supply from ancient wallets has been capping upside but has been largely absorbed well, matching the pattern seen last year when Germany's Saxony state liquidated its holdings. "Price levels in BTC have tended to consolidate around psychological levels (think $100,000, $110,000, $120,000) and specifically around ATH levels. This same pattern was seen just last month at the $110,000 level as we touched all-time highs at the 112 area and then drifted lower several times," Gaer said. The persistent selling of higher strike calls by institutions could have influenced the rally speed. They typically do so to earn an additional yield on top of spot market holdings. According to Gaer, the so-called call overwriting has led to a volatility meltdown. Implied volatility, which represents expected price turbulence over a specific period, is driven by demand for options. "Call overwriting activity by long-term holders continues in a seemingly unabated fashion, with a vol crush that’s left BTC with weekend vols in the teens- unheard of in my experience. I use the phrase '40 is the new 60' when referencing the overall BTC [implied] volatility repricing– this is a historical sign of a market maturing," Gaer said. What next? The path of least resistance remains upside, thanks to signs of strong dip-demand and macroeconomic tailwinds. "1.88 million addresses bought 1.3 million BTC at an average of $118,000, indicating a strong layer of demand that has so far prevented a deeper pullback," Halm told CoinDesk. Speaking of macro, the market is increasingly getting comfortable with the idea that the new normal inflation in the post-COVID world is well above the Fed's 2% target and expects the central bank to cut rates in September. Steve Gregory, founder of Vtrader, expects renewed rotation of funds into bitcoin from ether. "We may see a rotation back to bitcoin and a break of the $120,000 level as bitcoin's 3-month volatility hit its lowest since September 2023. Furthermore, 95% of ETH wallets are now in profit, indicating that traders may make a logical rotation back to BTC," Gregory said.
