According to fresh insights from VanEck analysts, the recent drop in Bitcoin isn’t being caused by long-term holders (the whales) but rather mid-cycle traders. Isn’t that interesting?
In their latest report, they pointed out that while long-term investors are still accumulating Bitcoin, the short-term futures markets are in a tough spot, showing signs of being oversold after some tariff-triggered sell-offs.
Even though many speculate that early Bitcoin whales are to blame for the selloff, the data tells a different story: coins held for five years or more are still on the rise! Over the last two years, these long-term holders piled on about 278,000 BTC, indicating that wallets with the most history are not moving much.
On the flip side, wallets that last moved their coins 3 to 5 years ago have dropped in volume across the board. This group saw a 32% decline over two years as their coins moved to new addresses. VanEck analysts believe these sellers are more like cycle-driven traders than true long-term investors.
“Weak hands” set early pressure: VanEck
This past month saw Bitcoin dip by 13%, partly due to money flowing out of Bitcoin ETPs. Since October 10, balances in Bitcoin ETPs have decreased by about 49,300 BTC — around 2% of total assets under management — as recent buyers are bailing out amid uncertainty around interest rates and changes in market sentiment toward AI.
Retail investors seem to be feeling the heat, too, with Bitcoin’s fear-and-greed index hitting its lowest point since March, coinciding with the surge in tariff-related volatility.
VanEck highlighted that whale movements are more complex than just outright selling. Large holders with between 10,000 and 100,000 BTC have been slowly reducing their numbers over time — a 6% drop in six months and an 11% drop over the past year. Meanwhile, mid-sized holders who have between 100 and 1,000 BTC are stepping up, increasing their balances by 9% and 23% in those same timeframes.
Recently, some larger players have shifted to buying. The group holding between 10,000 and 100,000 BTC has boosted their holdings in the last 30, 60, and 90 days, which aligns with a notable dip in futures market activity amid the sell-off.
While analysts are cautious about making predictions, they do observe that long-term Bitcoin holders remain solid, mid-cycle traders are causing the selling wave, and futures markets are undergoing quite the transformation. After a month of significant sell-offs, they suggest that the current market conditions may signal a good chance for some investors to jump back in.
Mid-cycle Bitcoin holders show the most selling
Diving into the age of the coins rather than just the size of wallets, it seems the most selling pressure comes from holders who last moved their Bitcoin within the last six months to five years. These groups have experienced some serious outflows lately.
Those holding Bitcoin for 6 months to 2 years have turned into sellers, while the 3 to 5-year batch is steadily decreasing, regardless of the periods examined. Analysts link this trend to traders who got in during earlier down cycles and are now cashing out as prices falter.
In contrast, coins last moved more than five years ago show very little activity, reinforcing the notion that long-term holders aren’t the ones causing this drop.
Bitcoin’s futures markets reset as funding and open interest collapse
The futures market has seen a rapid unwinding of speculative positions. Open interest in Bitcoin perpetual futures plummeted by about 19% in just 12 hours during the sell-off, down 20% in BTC value since October.
Funding rates, a key indicator of optimism in the futures market, have also dipped to their lowest levels since late 2023.
VanEck analysts mentioned that large basis-trading operations, including funds using long-spot/short-perpetual strategies, may be weighing down funding signals.
As of now, Bitcoin is trading near $88,500 — its lowest point in seven months — as the crypto markets continue their downward trend, alongside a sharp drop in major crypto stocks. Bitcoin has decreased by 4% over the past 24 hours, hovering near its weekly lows, with a daily trading volume of $71 billion and a total market cap of $1.78 trillion.