Bitcoin’s continued price movement has sparked intense analysis as it continues to hover below the $100,000 mark. Despite hitting an all-time high above $108,000 last week, the cryptocurrency has struggled to maintain bullish momentum since then.
With this performance, BTC on-chain data has come to the fore to uncover the factors driving recent selling pressures and investor behavior. A key focus has been the Spent Output Age Bands (SOAB) indicator, which provides valuable insights into the activity of Bitcoin holders based on their holding periods.
Who cashed out your Bitcoin profits?
According to a CryptoQuant analyst known as Yonsei Dent, data reveals that Bitcoin investors who purchased their holdings between six and twelve months ago were the most active sellers during the recent price surge.
This group largely entered the market during the initial excitement surrounding the launch of Bitcoin exchange-traded funds (ETFs) earlier in the year. While this selling activity put downward pressure on the price of Bitcoin, the asset managed to stabilize within the $90,000 to $100,000 range.
Interestingly, long-term holders, defined as those who have held Bitcoin for more than a year, have shown minimal selling activity. Historical trends suggest that these experienced investors are likely anticipating elevated price levels before considering substantial profit taking.
Meanwhile, Dent pointed to the Binary Coin Days Destroyed (CDD) metric showing a notable decline in older Bitcoin movement in December compared to November. Historically, reduced activity by long-term holders during price corrections often indicates market resilience and potential for future bullish momentum.
The analyst wrote:
The ‘CDD binary’ indicator at the bottom of the chart shows a decrease in the sale of older Bitcoin in December compared to November. This suggests that many long-term holders can anticipate even higher prices before selling.
Binance reserves indicate confidence in the market
Speaking of higher prices, another crucial metric that suggests a significant move is brewing for Bitcoin comes from Binance’s Bitcoin reserves, which have been steadily declining since August.
CryptoQuant Darkfost Analyst highlighted that Binance reserves recently hit their lowest level since January. This trend is significant because a similar drop earlier in the year preceded a 90% rise in the price of Bitcoin.
The reduction in foreign exchange reserves usually indicates that investors are moving their Bitcoin holdings from centralized exchanges to private wallets.
This behavior suggests lower selling pressure and a preference for long-term holding strategies. Historically, declining stocks on stock exchanges have often aligned with periods of strong market optimism and price rallies.
Notably, given that BTC is still currently trading at a price of $95,567 with a drop of 2.7% in the last day, the confluence of these factors (confidence of long-term holders, reduced activity of older wallets and reserves of change in decline) presents a cautiously optimistic outlook for Bitcoin’s near-term trajectory.
However, it is cautioned that sustained buying activity will be necessary to overcome psychological resistance levels and maintain bullish momentum.
Featured image created with DALL-E, TradingView chart
