Bitcoin Sell-Pressure from Long-Term Holders Nears Saturation: A Catalyst for Bullish Reversal?

The Bitcoin market in late 2025 stands at a critical juncture, shaped by the interplay of on-chain supply dynamics and institutional liquidity. After years of cyclical volatility, the cryptocurrency's price trajectory now hinges on whether the sell-pressure from long-term holders (LTHs) has reached a saturation point-a potential inflection point for a bullish reversal.

On-Chain Supply Dynamics: A Cyclical Low in Selling Pressure

Data from on-chain analytics reveals a marked decline in sell-pressure from LTHs, a group that historically dominates Bitcoin's supply chain. The 90-day average of daily sales from these holders has fallen to approximately 1,000 BTC, down from a peak of 2,350 BTC earlier in the year according to CoinDesk. This reduction suggests that the bulk of spot-driven selling has already occurred, with LTH supply reaching a cyclical low as Bitcoin bottomed near $80,000 in November 2025 according to CoinDesk.

The shift in behavior among LTHs is also noteworthy. Rather than outright selling, many are now adopting yield-generating strategies through derivatives, which create indirect sell pressure via hedging activities but preserve their ownership stakes. This transition reflects a broader maturation of the market, where seasoned holders seek to monetize gains without liquidating their positions entirely.

However, the broader market remains vulnerable to concentrated selling from legacy wallets. These large transfers from cold storage to active addresses-consistent with realization events-have overwhelmed fresh institutional demand, contributing to Bitcoin's pullback from six-figure highs to the mid-to-high five-figure range. The cost-basis asymmetry among holders further complicates the picture: early adopters with low realized costs are monetizing gains, while middle-era holders remain sensitive to price fluctuations.

Institutional Liquidity: A Double-Edged Sword

Institutional liquidity has played a pivotal role in both enabling and mitigating sell-pressure. The rise of U.S. spot Bitcoin ETFs, with over $191 billion in assets under management by late 2025, has provided a critical bid for Bitcoin, particularly in the first half of the year. BlackRock's IBIT alone accounts for 48.5% of the market, underscoring the dominance of institutional vehicles in shaping liquidity.

Corporate treasuries have also contributed to this dynamic. Companies like MicroStrategy have accumulated 257,000 BTC since 2024, while tokenized real-world assets (RWAs) have surged to $24 billion in value, linking traditional finance to blockchain-based yield opportunities. These developments have enabled LTHs to distribute approximately 1.6 million BTC into circulation since 2024-a deliberate, strategic move rather than technical selling.

Yet, institutional demand has softened in late 2025. ETF outflows and reduced appetite for Bitcoin exposure reflect macroeconomic uncertainty and risk-off sentiment, particularly as tech assets and AI-related stocks face broader selloffs. This softening has left the market more exposed to concentrated selling from large wallets, a vulnerability that could persist until institutional rebalancing in early 2026 according to K33.

The Path to Saturation and Potential Reversal

The convergence of on-chain and institutional trends suggests that Bitcoin's sell-pressure is nearing saturation. On-chain metrics such as the Realized Profit/Loss Ratio show a declining trend since early 2025, despite short-term spikes in profit-taking according to Glassnode. The recent crossover of the 1-month average below the 6-month price-a so-called "Death Cross"-has historically signaled bearish trends, but its impact may wane as LTH supply stabilizes.

K33, a blockchain analytics firm, estimates that 20% of Bitcoin's supply has already reactivated over the past two years, with large holders depositing less of their holdings onto exchanges for sale. By late December 2025, the share of total deposits from large players had fallen to 21%, down from 47% in mid-November, signaling reduced intent to offload large quantities. This moderation in selling activity, coupled with potential portfolio rebalancing in early 2026, could create conditions for a bullish reversal according to K33.

Market Implications and the Road Ahead

The immediate outlook remains cautious. Bitcoin's "shoulder" phase-characterized by limited upside potential, higher volatility, and intermittent corrections-suggests a range-bound or slowly drifting market according to MEXC. A 20–30% correction from six-figure levels would test prior consolidation zones, consistent with historical patterns during such phases according to MEXC.

However, the long-term case for Bitcoin remains intact. Institutional adoption, regulatory clarity, and the maturation of tokenized assets are structural tailwinds that could reaccelerate demand once selling pressure abates according to MEXC. For now, investors must navigate a delicate balance: monitoring on-chain metrics like LTH flows and realized PnL trends while assessing institutional liquidity shifts through ETF inflows and futures open interest according to MEXC.

In conclusion, the saturation of LTH sell-pressure-coupled with stabilizing institutional liquidity-presents a compelling case for a bullish reversal. Yet, the path forward will require patience and discipline, as the market works through its cyclical adjustments. For those who can weather the near-term volatility, the rewards may prove substantial.