Bitcoin's highest-conviction holders, defined as those who have held their coins for at least 155 days, have begun selling in significant volumes as the cryptocurrency's price reaches new lows. In the past two days alone, these long-term holders have sold approximately $2.4 billion worth of bitcoin, a move that Compass Point analyst Ed Engel notes has 'large implications on BTC's supply/demand balances' [1]. Of the bitcoin sold in the past 30 days, 26% came from investors who purchased at prices above $90,000, indicating that even those who bought at the peak are now capitulating [1].
This wave of selling is described by Engel as 'top-buyer capitulation,' a phenomenon commonly seen in the late stages of bear markets. Engel suggests that this could signal the beginning of the end for the current crypto slump, stating, 'This makes us more confident that BTC's bear market is in late stages' [1].
Despite these developments, bitcoin continues to struggle, failing to recover toward its October record high of over $126,000. Ongoing uncertainty related to the Iran war has kept downward pressure on the price, while the broader stock market has reached new highs. This divergence has led 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. Net assets across bitcoin ETFs have dropped from $107.8 billion on May 14 to $85 billion, reflecting waning investor appetite [1]. Bitcoin is down 12% week-to-date, with a cascade of long liquidations accelerating the decline after a minor sale by Strategy triggered fear-based selling on Monday. However, analysts emphasize that ETF flows, not Strategy's sale, are the primary driver of bitcoin's price movements, accounting for about 45% of weekly return variation according to Citi analyst Alex Saunders [1].
Looking ahead, analysts expect sentiment to remain subdued, especially as the divergence with equity performance persists and the likelihood of a U.S. market structure bill—which could renew investor interest—diminishes [1].
CONCLUSION
The capitulation of bitcoin's high-conviction holders and the record streak of ETF outflows underscore deepening bearish sentiment in the crypto market. Analysts suggest the bear market may be in its late stages, but absent positive regulatory developments or renewed investor interest, sentiment is expected to remain weak.