Bitcoin has broken through its historical high and is about to reach the much-anticipated $100,000. The driving force behind this is not only the surge in market demand, but also the combined effect of ETF fund inflows and strong momentum in the spot market.
This article focuses on the recent price dynamics of Bitcoin, deeply analyzing the key role of ETFs in absorbing selling pressure from long-term holders, and how stablecoin funds boost market sentiment. In addition, through on-chain data analysis, this article reveals investor profitability and long-term holder spending behavior, showing the potential and risks of further market gains.
Key Summary
Bitcoin has risen to 99,000, driven by strong inflows from ETFs and the spot market. Over the past 30 days, the market has absorbed over $62.9 billion, with Bitcoin dominating demand inflows.
Unrealized profits of long-term holders have reached high levels, prompting significant selling behavior, with a total of 128,000 Bitcoins sold from October 8 to November 13.
The U.S. spot ETFs play a key role, absorbing about 90% of the selling pressure from long-term holders during this period, highlighting the importance of ETFs in maintaining market liquidity and stability.
Surge in capital inflows
Since the beginning of November, Bitcoin's price performance has been remarkable, repeatedly reaching new historical highs throughout the month. Comparing the current cycle's price performance with the 2015 to 2018 🔵 and 2018 to 2022 🟢 cycles reveals significant similarities. Both in terms of the increase and duration, the performance is astonishingly consistent, despite vastly different market conditions.
The consistency during this period is fascinating, providing insights into Bitcoin's overall economic price behavior and periodic market structure.
Historically, bull markets tend to last from 4 to 11 months, providing a historical framework for assessing the duration and momentum of cycles.
This week, Bitcoin reached a new historical high of 99,299, with a quarterly performance of an astonishing +61.3%. In contrast, gold and silver had quarterly increases of only +5.3% and +8.0%.
This apparent gap indicates that capital may be shifting from traditional commodity value storage assets to the younger, digital Bitcoin.
Bitcoin's market capitalization has also expanded to an astonishing $17.96 trillion, becoming the seventh-largest asset globally, surpassing silver valued at $17.63 trillion and Saudi Aramco at $17.91 trillion.
Currently, Bitcoin is only about 20% behind Amazon, viewing this as the next significant milestone.
After Bitcoin's impressive performance over the past 90 days, the broader digital asset market has begun to attract significant capital. In the past 30 days, total capital inflows reached $62.9 billion, with Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supply grew by $9.6 billion.
These capital inflows symbolize the highest levels since the peak in March 2024, reflecting a rebuilding of confidence and the emergence of new demand following the U.S. presidential election.
Further analyzing capital inflows, the $9.7 billion in stablecoins minted over the past 30 days has mostly flowed directly into centralized exchanges. This inflow closely matches the total capital flow of stablecoin assets during the same period, emphasizing the crucial role of stablecoins in facilitating market activity.
The surge in stablecoin balances on exchanges reflects strong speculative demand, with investors attempting to capitalize on trends, further reinforcing optimism and post-election momentum.
Surveying investors' ability to take profits
We have explored how the rising tide of market liquidity supports Bitcoin's outperformance. Next, we will assess how this price action affects the unrealized profits (paper gains) of market investors using the MVRV ratio for analysis.
Comparing the current MVRV ratio 🟠 with its annual moving average 🔵, we can see an accelerated increase in investors' profit-taking ability. This phenomenon typically supports sustained market momentum but also creates conditions under which investors are more likely to begin profit-taking to realize these unrealized gains.
As the profit-taking ability of market investors increases, potential new selling pressure also rises. By overlapping the MVRV ratio with the ±1 standard deviation band, we can construct a framework to assess market overheating and cooling conditions.
Overheated (Warm Color): MVRV above +1 standard deviation
Cooling (Cool Color): MVRV below -1 standard deviation
Bitcoin's price recently broke through the +1σ band located at 89,500, indicating that investors currently hold statistically significant unrealized profits, suggesting an increased likelihood of profit-taking activities.
Nevertheless, historically, markets tend to maintain this overheated state for quite a while, especially when there is sufficient capital inflow to absorb selling pressure.
Extreme spending by long-term holders
During the euphoric phase of market cycles, the behavior of long-term investors becomes crucial. Long-term holders control a large supply, and their spending dynamics can significantly impact market stability, ultimately forming local or global peaks.
We can use the NUPL indicator to assess the unrealized gains held by long-term holders, currently at 0.72, just below the thresholds for belief 🟢 and euphoria 🔵 at 0.75. Despite significant price increases, the sentiment among these investors remains cautious compared to previous cycle peaks, suggesting there may still be room for further growth.
As Bitcoin surpassed 75,600, all 14 million Bitcoins held by long-term holders entered profit status, accelerating spending. Since the historical peak was broken, balances have significantly decreased by over 200,000 Bitcoins.
This is a classic and recurring pattern, where long-term holders begin to take profits whenever price action is strong and demand is sufficient to absorb it. With a significant amount of Bitcoin still held by long-term holders, many may be waiting for higher prices before releasing more coins into the circulating market.
We can use a binary indicator of long-term holder spending to assess the intensity of selling pressure from long-term holders. This tool evaluates the percentage of days over the past two weeks that this group has spent more than their cumulative amount, leading to a net decrease in their holdings.
Since early September, as Bitcoin prices have risen, spending by long-term holders has steadily increased. Recently climbing to 99,000, this indicator shows that over the past 15 days, there have been 11 days of declining balances among long-term holders.
This highlights the increased distribution pressure among long-term holders, but it has not yet reached the scale observed near the peaks in March 2021 and March 2024.
By identifying the spending behaviors of long-term holders, we can use the next tool to gain deeper insights into their activities at key market points. The interaction between profit-taking and unrealized profits helps highlight their role in shaping cycle transitions.
This chart visualizes:
Realized Price of Long-Term Holders (🔵): The average buying price of long-term holders.
Profit/Loss Pricing Band (🔵): Indicates bands representing extreme profits (+150%, +350%) and losses (-25%), which typically trigger significant spending activity.
Profit-Taking (🟩): A phase where long-term holders realize more than +350% profit and increase spending.
Surrender (🟥): A high expenditure period for long-term holders in a state of more than -25% loss.
The price of Bitcoin has exceeded the +350% profit band (located at 87,000), prompting significant profit-taking behavior from this group. With the market rebound, distribution pressure may increase, while unrealized gains will correspondingly expand. That said, this has often symbolized the beginning of the most extreme phases in previous bull markets, with unrealized profits expanding to over 800% during the 2021 cycle.
Institutional Buyers
Now, we turn our attention to the impact of institutional buyers on the market, particularly through U.S. spot ETFs. In recent weeks, ETFs have become the primary source of demand, absorbing most of the selling pressure from long-term holders. This dynamic also highlights the increasing importance of institutional demand in shaping the modern Bitcoin market structure.
Since mid-October, ETF inflows have surged to between $1 billion and $2 billion weekly. This represents a significant rise in institutional demand and is one of the most notable inflow periods to date.
To visualize the opposing forces of long-term holder selling pressure and ETF demand, we can analyze the 30-day changes in Bitcoin balances of each group.
The chart below shows that from October 8 to November 13, ETFs absorbed approximately 128,000 Bitcoins, accounting for 93% of the net selling pressure of 137,000 Bitcoins from long-term holders.
This highlights the important role of ETFs in stabilizing the market during periods of high selling pressure. However, since November 13, selling pressure from long-term holders has begun to exceed the net inflow of ETFs, resembling a pattern observed in late February 2024 when supply-demand imbalances led to increased market volatility and consolidation.
Summary and Conclusion
Bitcoin has risen to 99,000, supported by strong inflows, with approximately $62.9 billion flowing into the digital asset industry over the past 30 days. This demand is led by institutional investors in the U.S. spot ETFs, possibly capital even shifting from gold and silver.
ETFs have played a crucial role, absorbing over 90% of the selling pressure from long-term holders. However, as unrealized profits reach more extreme levels, we can expect more spending behavior from long-term holders, which has already exceeded the inflow levels of ETFs in the short term.
