Bitcoin Drops 6% as Long-Term Holders Cash Out 56% of Profits

Bitcoin's recent rally experienced a significant setback as long-term holders began to cash out their holdings. The cryptocurrency surged to an all-time high of $123,000 before retreating to below $117,000, marking a 5% to 6% price pullback. This correction was driven by a substantial amount of profit-taking, with investors realizing $3.5 billion in profits over the past 24 hours.

According to Glassnode, long-term holders, defined as those who bought more than 155 days ago, accounted for 56% of the total profits realized. This group of investors, who had held onto their Bitcoin for an extended period, saw an opportunity to lock in gains during the recent price surge. The rapid price action from $108,000 to $123,000 left a notable supply gap in the $110,000 to $116,000 range, as there was little trading activity within this price band.

Glassnode’s UTXO Realized Price Distribution (URPD) provides insights into this phenomenon. The URPD measures unspent transaction outputs (UTXO), which capture the prices at which Bitcoin was bought and not sold. It represents the prices at which BTC is currently being held across the Bitcoin blockchain. The entity-adjusted version of this data accounts for the average purchase price of each entity’s full balance and excludes internal transfers between addresses owned by the same entity, which do not represent genuine market activity. It also filters out supply held on exchanges to avoid distortions in the data.

With minimal supply sitting between $110,000 and $116,000, as shown by the dip in the URPD chart, the market remains vulnerable to sharp moves in either direction. The lack of trading activity in this price range means that any significant buying or selling pressure could lead to a rapid price change. This supply gap highlights the potential for volatility as the market adjusts to the recent profit-taking by long-term holders.