Bitcoin Profit-Taking Shifts 2024: Last Cycle’s HODLers Drive Billion-Dollar Selloff

Bitcoin’s relentless march through 2024 has taken yet another unexpected turn, with long-term holders (LTHs) from the 2020-2022 price cycle emerging as the dominant force behind a staggering profit-taking wave in July. On-chain data from Glassnode paints a vivid picture of seasoned investors cashing out over $1 billion daily at their peak, a stark contrast to earlier selloffs led by newer players. As Bitcoin hovers around $119,500 with bullish undertones, the slowdown in selling leaves us wondering if the old guard is done—or just reloading for the next peak.

• Historic Shift: July’s profit-taking was driven by LTHs holding for 3-5 years, unlike late 2023’s surge led by newer holders (6-12 months).
• Massive Gains: Realized profits exceeded $1 billion daily in July, one of the largest selloffs in Bitcoin’s history.
• Current Snapshot: Bitcoin trades at $119,500 with a 4.5% weekly gain, even as LTH selling cools off.

Who Are Long-Term Holders, and Why Do They Matter?

For those new to the crypto game, long-term holders, or LTHs, are Bitcoin investors who’ve held their coins for over 155 days. This threshold isn’t arbitrary—it’s an industry-standard metric based on historical patterns where holders past this mark tend to be less reactive to price swings. Think of them as the battle-hardened warriors of the Bitcoin realm, the HODLers who’ve endured bear markets, FUD (fear, uncertainty, doubt), and endless “Bitcoin is dead” headlines. Their actions—or inaction—often signal deeper market sentiment, making their recent behavior a critical lens for understanding where Bitcoin might head next.

Glassnode, a heavyweight in on-chain analytics (which, by the way, means tracking Bitcoin transactions directly on the blockchain to decode investor moves), dropped a bombshell with their latest data. In July, the 7-day moving average of LTH Realized Profit—a fancy way of saying the actual cash these holders made by selling at a higher price than they bought—stayed above $1 billion per day. This isn’t just a few whales unloading; it’s a historic cash-out event, rivaling the biggest profit-taking sprees Bitcoin has ever seen, as detailed in recent Glassnode analysis. But what sets this apart isn’t just the scale—it’s who’s behind the trigger.

LTHs of Yesteryear Take Center Stage

Rewind to November and December of 2023, and the profit-taking narrative was different. Back then, the sellers were mostly newer LTHs, folks who’d held for 6-12 months, often tied to the wave of buyers snapping up Bitcoin spot ETFs launched in the US earlier in 2024. For clarity, these ETFs are exchange-traded funds that track Bitcoin’s price without requiring investors to own the crypto directly, a game-changer for both retail punters and big institutional players. Those newer holders, likely hyped by Bitcoin flirting with all-time highs (ATHs), jumped at the chance to lock in gains. Fair play to them—but they’re not the stars of July’s story.

Fast forward to mid-2024, and the baton passed to a grizzlier cohort: LTHs from the 2020-2022 price cycle, holding for 3-5 years. These are the survivors who bought during the last bull run’s euphoria, clung on through the soul-crushing drop below $20,000 in 2022, and watched Bitcoin claw its way past $100,000 this year. Their patience turned into profit, big time, as explored in this report on shifting profit-taking dynamics. Unlike the ETF-driven crowd, these holders represent a different mindset—less speculative, more endurance-based. So, when they sell, it’s not just a transaction; it’s a statement. Are they calling a top, or just taking a well-earned victory lap after years of grit?

July’s Frenzy Cools—But for How Long?

While July saw LTHs turn the market into their personal cash machine, Glassnode’s data shows the pace of selling has tapered off in recent weeks. Bitcoin’s price, pegged at around $119,500 with a 4.5% uptick over the last seven days per TradingView, suggests the market hasn’t lost its steam entirely. Still, a nagging uncertainty lingers: is this slowdown a sign that LTHs are done offloading, or are they simply waiting for the next ATH to dump even harder? Historical patterns, including those compared between the 2020-2022 cycle and recent ETF investor trends, lean toward the latter, as noted in this analysis of LTH behavior—but with macroeconomic wildcards like inflation or interest rate hikes in play, past behavior isn’t a guaranteed playbook.

One caveat on the price front: there’s a discrepancy in reported figures, with some Glassnode updates citing a trading range of $78,000-$88,000 more recently. This likely reflects a timing mismatch in data snapshots, but for now, I’m sticking with $119,500 as it aligns with the bullish weekly gains and broader market sentiment. Regardless of the exact number, the focus remains on holder behavior over raw price ticks.

Short-Term Holders Underwater: A Stark Contrast

While LTHs are popping champagne, short-term holders (STHs)—those holding for less than 155 days—are in a world of hurt. Glassnode’s latest reports reveal a brutal reality: over 3.4 million BTC held by STHs are underwater, meaning their purchase price is higher than the current market value. That’s over 90% of STH supply in the red, with cost bases ranging from $87,400 to $94,600 across different age bands. It’s a level of financial stress not seen since July 2018, and it paints a bifurcated market where timing is everything. Newbies learning the hard way that buying Bitcoin at peak hype is like catching a falling knife—painful and often bloody. For deeper insights into why holders might offload during downturns, check out discussions on motivations behind Bitcoin selloffs.

This disparity raises a thorny issue about accessibility. Bitcoin’s bull runs lure latecomers with dreams of quick riches, only to leave them crushed when corrections bite. Meanwhile, the old guard, who weathered the dark days of 2022, are banking serious gains. It’s a tale as old as crypto itself, but with STH losses mounting, there’s a real risk of capitulation—a mass surrender where holders sell at a loss, potentially triggering broader selling pressure that even LTH profits can’t offset.

Re-Accumulation: A Strategic Play or False Hope?

Here’s where things get intriguing. Despite the massive distribution waves—over 2 million BTC sold by LTHs in two major bursts—Glassnode notes a countertrend of re-accumulation. A recent wave saw LTHs scoop up +278,000 BTC, while wealth in the 3-6 month cohort (soon to transition to LTH status) is growing among holders who bought near $100,000. This push-pull dynamic—selling big, then buying back in—hints at a strategic maneuver rather than blind greed or panic. It’s as if these cycle veterans are reshaping Bitcoin’s supply structure, potentially tightening availability and setting the stage for future price surges if demand reignites, a trend further explored in this 2024 profit-taking analysis.

But let’s play devil’s advocate for a moment. Re-accumulation sounds bullish, yet it’s no guarantee of moon-bound prices. If macroeconomic headwinds—like Federal Reserve rate hikes or geopolitical chaos—dampen new capital inflows, even a constricted supply might not spark a rally. Sustainable bull markets, as Glassnode warns, need fresh money, and right now, demand looks shaky with STHs bleeding and institutional flows uncertain. Bitcoin’s decentralizing ethos thrives on individual freedom to buy or sell, but that same freedom fuels volatility when the market’s left gasping for liquidity.

A New Kind of Bitcoin Cycle?

Zooming out, the 2023-2025 Bitcoin cycle feels like it’s rewriting the rules. The textbook 4-year halving patterns—where price peaks follow supply cuts roughly every four years—are losing relevance as macroeconomic forces and institutional demand take the wheel. The launch of Bitcoin spot ETFs in 2024, distinct from earlier futures-based ETFs, has broadened access, pulling in players with longer time horizons. Glassnode observes that STH wealth concentration is lower this cycle—peaking at 50% compared to 70-90% in past bull runs—thanks to extended consolidation phases and savvier retail investors. Even amid profit-taking waves, Bitcoin’s narrative as a store of value is gaining ground.

Compare July 2024’s selloff to past cycles, like the 2021 peak at $69,000, and the scale feels similar, though direct numbers are trickier to pin down due to market maturation. Back then, LTH selling often signaled impending corrections, but today’s institutional backdrop and ETF-driven liquidity might cushion the blow—or amplify it if big players pull out. Add in potential regulatory curveballs, like harsher tax policies on crypto gains in key markets, and LTH behavior could shift further. Will they HODL longer to dodge tax hits, or cash out faster to lock in gains before the rules tighten? For a foundational understanding of Bitcoin and its market dynamics, refer to this comprehensive Bitcoin overview.

Bitcoin Maximalism vs. the Broader Ecosystem

As a Bitcoin maximalist at heart, I’ll argue that BTC’s dominance remains unchallenged, especially as LTHs strategically manage their stacks to reinforce its scarcity narrative. Yet, it’s worth noting that some of these profits might be diversifying into altcoins like Ethereum or innovative layer-2 protocols filling niches Bitcoin isn’t built for—think DeFi or scalable smart contracts. While Bitcoin doesn’t (and perhaps shouldn’t) serve every use case, the broader crypto ecosystem benefits from LTH liquidity flowing into other projects, even if it’s a begrudging nod from purists like myself. Still, let’s not kid ourselves—Bitcoin’s the king, and its market moves ripple across every corner of this space.

What Lies Ahead for Bitcoin?

At $119,500, Bitcoin continues to flex its muscle, shrugging off doomsayers who’ve called every top since it crossed five figures. But the tug-of-war between LTH profits, STH pain, and tepid new demand keeps the horizon murky. One thing’s crystal clear: this isn’t a playground for the faint-hearted or delusional moonboys banking on $1 million BTC by year-end. Bitcoin’s revolution—rooted in decentralization, privacy, and disrupting the status quo—marches on, and effective accelerationism suggests that even this volatility could redistribute wealth to new, innovative players who’ll push adoption harder. Only the sharp, the patient, and the unapologetically stubborn will ride this beast to the next summit.

Key Takeaways and Questions on Bitcoin’s Profit-Taking Dynamics

• Who’s behind the recent Bitcoin profit-taking surge?
  Long-term holders from the 2020-2022 cycle (3-5 years holding) led the charge in July, unlike late 2023 when newer holders (6-12 months) dominated.
• How significant was the July selloff?
  It was colossal, with over $1 billion in daily realized profits, marking one of the largest profit-taking events in Bitcoin’s history according to Glassnode.
• Has the selling wave stopped?
  It’s slowed in recent weeks, but it’s uncertain if LTHs will resume offloading at higher prices or hold for bigger gains.
• What’s happening with short-term holders?
  STHs are in deep trouble, with over 90% of their Bitcoin underwater, posing a risk of mass selling if losses become unbearable.
• Can Bitcoin keep its bullish momentum?
  There’s potential with LTH re-accumulation tightening supply, but stagnant capital inflows and STH stress could derail the rally without fresh demand.