Major Bitcoin LTH Sell-Off Signals Cycle Exhaustion as Supply Drops to 13.6M BTC

Overview

Bitcoin has faced significant challenges in maintaining its value, struggling below the $90,000 mark for over a week. Amidst ongoing selling pressure, market sentiment has shifted, with many analysts expressing concerns about a potential bear market following a sharp decline from recent cycle highs.

Current Market Situation

The recent downturn has left bullish traders feeling defensive as confidence wanes in both spot and derivatives markets. Analysts who previously anticipated new all-time highs are now revising their outlook, suggesting the market may be entering a bear phase. The broader market environment has seen a downward momentum shift, liquidity has decreased, and buyers have failed to reclaim crucial resistance levels, raising questions about whether the current decline signifies a deeper structural reversal or merely a temporary correction.

Long-Term Holders’ Role

Top analyst Axel Adler has highlighted the significant impact of Long-Term Holders (LTH) in the ongoing market conditions. LTH have engaged in extensive profit-taking, reducing their positions by a substantial amount over the quarter as Bitcoin’s price approached $80,000. This distribution aligns with historical patterns observed during exhaustion phases and late-cycle tops, fueling speculation that Bitcoin is entering a prolonged period of weakness.

Supply Levels and Historical Context

According to Adler, LTH supply levels have dropped sharply, returning to early 2023 lows. The current 30-day Net Position Change indicates one of the most significant sell-offs in the bull cycle, with LTH supply decreasing from a peak of 15.75 million BTC to 13.6 million BTC. This reduction is the lowest observed since the beginning of the cycle and suggests a classic smart-money distribution phase often seen near market tops.

In just two weeks, LTH sold over 803,000 BTC, which signifies a 5.54% reduction, averaging approximately 53,560 BTC sold per day. Historically, such a significant compression in supply has only occurred during major market inflection points, indicating the potential seriousness of the current situation.

Price Action and Market Dynamics

Bitcoin’s price has shown a struggle to stabilize following a steep decline from the $120,000 region to a recent low near $80,000. The current trading level around $86,800 indicates an attempted relief bounce; however, the overarching trend remains bearish. The price is positioned below key moving averages, which typically suggests sustained downside momentum.

The rejection from the mid-November breakdown zone reinforces the notion that former support levels have now become resistance. During the sell-off, volume spikes indicate forced liquidations and capitulation-driven selling rather than orderly distribution, while the recent bounce has occurred on lighter volume, reflecting weak buyer conviction.

For bullish traders, the critical focus is on whether Bitcoin can establish a base above the $85,000 region to avoid further selling pressure. A failure to maintain this level could lead to additional declines.

Impact on the crypto market

• Increased selling pressure from Long-Term Holders indicates a potential market shift.
• Historical patterns suggest the current sell-off could signify a late-cycle top.
• Decreased liquidity and confidence may lead to further price declines.
• The market’s ability to regain support levels will be crucial for future price stability.
• Overall bearish sentiment may deter new investments and exacerbate volatility.

Updated: 11/27/2025, 3:15:17 AM