Bitcoin “Diamond Hand” Sell-Off Risks Outpacing ETF Inflows Amid $98k Prices
Long-term Holders Reduce BTC Exposure Amid Price Breakout
The Bitcoin price has been on a wild ride, reaching nearly $100,000, but some old hands are not waiting to take profit. Data from on-chain analytics firm Glassnode shows that long-term holders (LTHs) have begun reducing their BTC exposure.
Long-term Holders Up Bitcoin Sales Through November
According to Glassnode, LTHs have accumulated a significant amount of BTC over the past six months. However, in recent weeks, they have flipped to net sellers. This trend is concerning as it may indicate that some investors are taking profits and reducing their exposure to the market.
Accelerating Selling Trend
The data from Glassnode reveals an accelerating selling trend among LTHs. The 30-day net position change among LTH entities shows a significant decrease in recent weeks. On November 20, the LTH net position decrease reached 245,000 BTC compared to 30 days previously. This represents the largest comparative 30-day reduction since April.
Bitcoin LTH Net Position Change
| Date | Net Position Change |
| — | — |
| Apr 2022 | -200,000 BTC |
| Nov 20, 2022 | -245,000 BTC |
Source: Glassnode
Crypto Analyst Miles Deutscher Weighs in on the Trend
Responding to the data from Glassnode, crypto analyst Miles Deutscher suggested that only large-scale buying pressure could meaningfully counter the LTH trend. Top of the list are the United States spot Bitcoin exchange-traded funds (ETFs).
ETF Flows Must Remain Strong
"We need to see strong ETF inflows to counter the LTH sell pressure," Deutscher warned in an X post. "If ETF flows slow down, it could lead to a significant decline in the market."
US Spot Bitcoin ETF Netflows
| Date | Net Inflows |
| — | — |
| Nov 20, 2022 | $770 million |
Source: Farside Investors
ETFs See Record Net Inflows
The ETFs have seen record net inflows over the past month. This week, they boosted the industry further with the launch of options trading. Data from UK-based investment firm Farside Investors confirms that November 20 saw net inflows of over $770 million.
Bitcoin LTH vs. ETF Net Position Change
| Date | LTH Net Position Change | ETF Net Inflows |
| — | — | — |
| Nov 20, 2022 | -245,000 BTC | +$770 million |
Source: Miles Deutscher/X
Bitcoiners Sit on ‘Significant’ Unrealized Profits
Continuing, Glassnode acknowledged that Bitcoin holders of all kinds are now firmly in the black. This is due to the significant price increase over the past year.
"As the profitability of market investors increases, the elevated potential for new sell-side pressure comes into play," Glassnode wrote in its latest edition of ‘The Week Onchain’ newsletter, released on November 20.
Market Value to Realized Value (MVRV) Metric
Glassnode highlighted the MVRV metric, which measures almost as much as at Bitcoin’s old $73,800 peak in March. The market value to realized value (MVRV) ratio is a key indicator of the overall health of the market.
Bitcoin MVRV Extreme Deviation Pricing Bands
| Date | MVRV Ratio |
| — | — |
| Mar 2022 | 4.5 |
| Nov 20, 2022 | 6.1 |
Source: Glassnode
"This signals that investors are now holding statistically significant unrealized profits," Glassnode commented on deviations in realized price. "This suggests an increased likelihood of profit-taking activities."
Conclusion
The market has historically remained in this overheated state for extended periods of time, especially when supported by sufficiently large capital inflows to absorb sell-side pressure.
Article Not Containing Investment Advice or Recommendations
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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