Bitcoin investors are choosing to reduce risk amidst uncertainty. If history serves as a guide, then volatility can become the engine.
Bitcoin's [BTC] volatility is its greatest strength and also its biggest flaw. Even with institutional buying, corporate commitment, and smart money accumulation, BTC has not approached $110,000 for 120 days.
So, what is stopping it? As AMBCrypto has pointed out, investors have been locking in profits to avoid larger losses.
While this may sound somewhat pessimistic, it is not without strategic significance. In this sense, Bitcoin's volatility may be accumulating momentum for the next round of upward movement.
Long-term holder distribution and volatility signals.
The attached chart reveals a significant trend.
Since November 2023, long-term holders (LTH) — those holding BTC for 18 months to 3 years — have sold over 2 million Bitcoins. They have realized net gains of about $138 billion.
LTH supply has steadily decreased from a peak of 4.254 million BTC to 2.176 million BTC, marking a clear phase of market decentralization. In fact, this is very similar to what we have seen in past bear markets.
The most obvious example is that a similar situation occurred in 2022, when Bitcoin dropped 63% from an opening price of $46,017.
The difference in the current cycle lies in the outcome. Despite levels of long-term distribution and profit-taking being relatively similar, Bitcoin has continued to rise. During the same period, Bitcoin's price increased by nearly 200%.
This indicates that the situation has changed. All this selling and volatility is not only unlikely to trigger a collapse but may actually be shaking up the market, laying the foundation for stronger and more prudent accumulation.
Bitcoin's next major opportunity.
Closely monitoring this group is crucial. Based on their current BTC holdings, up to 500,000 Bitcoins are expected to enter the market from dominant expert projects by the end of this year.
This may mean that a strong wave of exit liquidity will form beneath the surface.
AMBCrypto believes that such distributions will inevitably put new pressure on Bitcoin's volatility. Therefore, this will test the market's ability to absorb large-scale distributions without disrupting the overall upward trend.
However, as institutional and corporate interest in Bitcoin now exceeds the levels of the 2023-24 cycle, this volatility may no longer be a threat, but rather another opportunity.
If history is any guide, Bitcoin may once again demonstrate its resilience, providing bulls with a strategic entry point and laying the groundwork for further price discovery.
