Bitcoin's highest conviction holders, defined as those who have held their coins for at least 155 days, have recently turned into sellers, marking a significant shift in market dynamics as the cryptocurrency's price hits new lows [1]. In the past two days alone, these long-term holders sold approximately $2.4 billion worth of bitcoin, a move that Compass Point analyst Ed Engel suggests could signal the late stages of the current bear market [1]. Of all bitcoin sold in the past 30 days, 26% came from investors who purchased at prices above $90,000, indicating that even top-buyers are capitulating as bitcoin approaches new cycle lows [1].
This wave of selling has had a notable impact on bitcoin's supply and demand balance, with Engel emphasizing that such capitulation is common in late-cycle bear markets and could point to an impending end to the downturn [1]. Despite this, bitcoin continues to struggle, remaining well below its October record of over $126,000, as ongoing uncertainty related to the U.S.-Iran war exerts downward pressure on the price [1]. In contrast, the stock market has reached new highs, leading investors to question bitcoin's dual narratives as both 'digital gold' and a high-beta tech stock [1].
Market data shows that bitcoin ETFs have experienced their longest streak of net outflows ever, with 12 consecutive days of withdrawals, causing net assets across bitcoin ETFs to fall from $107.8 billion on May 14 to $85 billion [1]. Bitcoin is down 10% week-to-date, with a cascade of long liquidations accelerating the decline after a minor sale by Strategy triggered fear-based unloading on Monday [1]. However, analysts note that Strategy's sale of 32 coins was not a significant driver of the price movement [1].
Citi analyst Alex Saunders highlights that ETF flows are the primary driver of bitcoin price appreciation, accounting for about 45% of weekly return variation [1]. Recent negative flows, coupled with diminishing prospects for the passage of a U.S. market structure bill, have contributed to lackluster sentiment [1]. Saunders expects sentiment to remain subdued, especially given the stark divergence between bitcoin and equity performance, unless there is positive regulatory news or renewed 'de-basement trade' fears [1].
CONCLUSION
The capitulation of bitcoin's long-term holders and persistent ETF outflows have intensified the cryptocurrency's recent decline, signaling a potentially late-stage bear market. With sentiment remaining weak and regulatory catalysts fading, bitcoin faces continued pressure unless new positive developments emerge.