"Old investors" sell off, "new money" shrinks, Bitcoin struggles to find support

Author: Zhao Ying, Wall Street Insights

Long-term Bitcoin holders are continuously selling off, while market absorption capacity is rapidly shrinking. This supply and demand imbalance has caused the cryptocurrency market to experience a slow and persistent decline. Since surpassing the all-time high of $126,000 in January this year, Bitcoin has fallen nearly 30%, currently hovering around $85,000, struggling to find effective support.

According to Bloomberg on Thursday, blockchain data shows that “OG Bitcoin holders”—those who have held coins for years—are cashing out at the fastest rate in recent years. A report from K33 Research indicates that since early 2023, Bitcoin that has not moved for at least two years has decreased by 1.6 million coins, worth about $140 billion. In 2025 alone, nearly $300 billion worth of Bitcoin that has been dormant for over a year will re-enter circulation. Data from blockchain analytics firm CryptoQuant shows that the past 30 days have been one of the most intense periods of long-term holder selling in over five years.

Meanwhile, the demand forces that absorbed this selling pressure over the past year are waning. Exchange-Traded Fund (ETF) capital flows have turned negative, derivatives trading volume has plummeted, and retail participation has significantly decreased. The same supply now faces a market that is more fragile and has fewer active buyers.

This pressure became especially evident after October 10. At that time, President Trump made an unexpected statement about punitive tariffs, triggering $19 billion in liquidations, setting a record for the largest single-day leveraged liquidation in cryptocurrency history. Since then, traders have been retreating from the derivatives market, with no clear signs of a rebound so far.

Selling Pressure Encounters Liquidity Vacuum

Chris Newhouse, Director of Research at Ergonia, a decentralized finance-focused research institution, said that the market is experiencing a slow bleed, characterized by persistent spot selling meeting weak buy-side liquidity, leading to a gradual decline that is harder to reverse than a leverage-driven crash.

For most of the past period, this selling was absorbed by newly launched ETFs and demand from crypto investment institutions. But now, this demand has diminished. ETF capital flows are negative, derivatives trading volume has declined, retail participation has thinned, and the market’s capacity to absorb selling has greatly weakened.

On Wednesday, Bitcoin briefly surged to $90,000, attributed by traders to the liquidation of large short positions, but then quickly resumed its downward trend. The original cryptocurrency retreated to the lower end of the trading range since the October crash, dropping as much as 2.8% to $85,278.

Second Largest “OG” Cash-Out in History

Vetle Lunde, senior analyst at K33, pointed out that the current selling wave is unprecedented in scale. Unlike previous cycles, these reactivated Bitcoins are not driven by altcoin trading or protocol incentives but are fueled by deep liquidity from US ETFs and institutional demand, allowing OG holders to realize profits at six-figure prices and significantly reduce ownership concentration. OG is a slang term used by crypto enthusiasts to describe early adopters and investors.

He stated that the selling volume this year and last year represents the second and third largest reactivation of long-term Bitcoin supply in history, second only to 2017.

According to data from Coinglass, the open interest in Bitcoin options and perpetual futures remains well below pre-October crash levels. This decline indicates that most traders are still on the sidelines, and such markets account for most of the crypto trading volume. Meanwhile, the basis trading strategy—commonly used by hedge funds, which profits from price differences between spot and futures markets—has also become unprofitable.

Selling Pressure May Be Nearing an End

Despite the heavy selling pressure, Lunde believes that long-term holders’ selling may be about to end. Based on observations of on-chain historical liquidity, this reactivation is approaching a threshold.

“Looking ahead, the selling pressure from long-term holders seems to be nearing saturation. About 20% of Bitcoin supply has been reactivated over the past two years,” Lunde wrote. “It is expected that OG selling will diminish by 2026, and as Bitcoin moves toward deeper institutional integration, shifting toward net buying demand, the two-year supply will begin to increase.”

However, before that, Bitcoin still faces the harsh reality of supply and demand imbalance. With new demand yet to emerge, whether the market can find stable support at current levels remains uncertain.