Understanding Bitcoin's Current Market Dynamics: A Closer Look

Bitcoin Struggles to Maintain Momentum

The onset of November has not been kind to Bitcoin, as the leading cryptocurrency continues its volatile trajectory from October. On the afternoon of Friday, November 7, Bitcoin experienced a notable decline, dipping below the critical $100,000 threshold for the second time in just a week.

This recent downturn in Bitcoin's price can largely be linked to a notable shift in investor behavior, particularly among a group referred to as long-term holders (LTHs). A notable figure in the crypto community on X, Julio Moreno, has offered valuable insights regarding how LTH actions are influencing Bitcoin's market dynamics.

Shifting Trends in Bitcoin Demand

In his recent update on the X platform, CryptoQuant's Head of Research, Julio Moreno, pointed out that long-term holders of Bitcoin have been increasingly selling their assets in recent weeks. Moreno emphasized that this trend of LTHs divesting isn't entirely unprecedented.

Historically, it is not uncommon for Bitcoin’s long-term investors to reduce their holdings during bullish market phases, capitalizing on high prices to realize profits. However, what's notable this time is the absence of sufficient demand to absorb these sales.

To illustrate his point, Moreno presented a chart that highlights the spending patterns of long-term holders alongside the apparent demand growth for Bitcoin over the past few years. Apparent demand growth is defined as the difference between the volume of Bitcoin being acquired and the amount that is being mined.

Moreno noted that previous all-time highs in Bitcoin's price coincided with periods of increased selling by long-term holders, but characterized by positive apparent demand growth. This pattern was clearly observable during the rallies that peaked in January-March 2024 and November-December 2024.

The chart underscores that while long-term holders have been offloading their Bitcoin since October, this behavior isn't particularly out of the ordinary. What is alarming, however, is the contracting apparent demand growth, indicating a lack of buying pressure to absorb the supply from LTHs at elevated price points.

Ultimately, these on-chain observations suggest that the current selling activities of Bitcoin’s long-term holders may not warrant excessive concern. For Bitcoin to regain its upward momentum in the weeks ahead, a rebound in apparent demand growth will be essential.

Current Bitcoin Price Overview

As of the latest updates, Bitcoin has managed to reclaim its position above the $100,000 mark, trading at approximately $103,700, reflecting a nearly 3% increase over the last 24 hours.