Subhead: Long-term Bitcoin holders are selling as market dynamics hint at a possible bubble blowoff phase amid abundant liquidity and strong demand.
Introduction
Bitcoin has delivered staggering returns since the start of its latest bull market in late 2022, soaring over 600%, vastly outperforming traditional assets like gold and the NASDAQ. Yet, beneath this excitement, some of the smartest investors, known as long-term holders, have begun to reduce their exposure. This behavior often signals a serious shift in market sentiment and could point to the end stages of a bubble. This article breaks down Bitcoin’s current bubble cycle, the key factors to watch, and what it means for investors now.
Who Are Bitcoin’s Long-Term Holders, and Why Do Their Moves Matter?
Long-term holders (LTHs) are investors who keep their Bitcoin for extended periods, often years, ignoring short-term volatility. Because of their patience and historical accuracy, LTHs are considered “smart money.” Usually, they accumulate aggressively during market bottoms and reduce exposure ahead of major price crashes.
Key Insight:
Since July 2025, on-chain data shows that LTHs have been selling their Bitcoin holdings actively. Historically, these selling patterns have preceded major crashes in 2017 and 2021, where Bitcoin dropped nearly 80%. This trend suggests that even the most patient holders sense a shift, likely preparing for a downturn.
Bitcoin Bubble Phases: What History Teaches Us
Bubbles typically progress through four phases:
- Stealth Phase: Early insiders quietly accumulate, sensing the asset’s potential.
- Awareness Phase: Institutional players begin entering, prices steadily rise.
- Mania Phase: Media hype and retail frenzy drive prices to explosive highs.
- Blowoff Phase: Overconfidence peaks; the price reverses sharply, causing financial losses.
Bitcoins’ previous bull runs, especially in 2017, followed this pattern closely. Currently, we see signs of the mania phase through strong media attention and speculative buying, especially from companies adding Bitcoin to their balance sheets.
Three Forces Driving Bitcoin During the Mania Phase
To assess if Bitcoin’s bubble is nearing its blowoff phase, analyze three critical drivers:
1. Liquidity in the Financial System
Liquidity refers to the money available for investments. When central banks cut interest rates, borrowing costs drop, injecting liquidity and fueling risk asset rallies, including Bitcoin.
- Since 2016, global liquidity has trended upwards with two notable contractions in 2018 and 2022 corresponding to Bitcoin price pullbacks.
- Recently, central banks have cut interest rates more than 300 times worldwide in two years, pumping liquidity into markets.
- Current global liquidity is near record highs and is poised to increase further, a typical setup for bullish risk assets.
2. Buyer Demand
Continuous demand must sustain bubble prices alongside liquidity.
- Bitcoin Exchange-Traded Funds (ETFs) hold a record $62 billion in assets.
- The number of companies holding Bitcoin as treasury assets has jumped from 1 in 2020 to nearly 50 in 2025.
- The count of “whale” treasury companies owning over 1,000 BTC doubled in one year, highlighting deep, institutional demand.
3. Price Momentum
Price momentum, often tracked by moving averages (MAs), reflects investor enthusiasm.
- During the 2017 mania, prices consistently stayed above key MAs until the peak.
- Momentum slowed wide before the 2017 crash, with MAs curling downward and price falling below them—a clear blowoff marker.
- Today, Bitcoin’s price has fallen below those critical moving averages, signaling weakening momentum and vulnerability to reversal.
Answer Box: What Does Long-Term Holder Selling Signal for Bitcoin?
Long-term holders are usually the “smart money” in Bitcoin markets. When their combined holdings start to decline, it often signals they anticipate a significant price drop ahead. Historically, such selling has coincided with the tops of major Bitcoin bubbles, such as those in 2017 and 2021. ---
Data Callout: Institutional Demand is Surging
- Number of companies holding more than 1,000 BTC increased from 18 in Q3 2024 to 35 in Q3 2025.
- This near doubling within a year points to serious accumulation by well-capitalized buyers, fueling Bitcoin’s mania phase alongside abundant liquidity.
Risks / What Could Go Wrong?
- Liquidity Changes: If central banks tighten monetary policy instead of easing, liquidity could dry up quickly, pushing Bitcoin down harder.
- Demand Drop: A sudden halt or reversal in ETF inflows or treasury buying could weaken support and accelerate selling pressure.
- Momentum Shift: Technical breakdowns may trigger panic selling, intensifying the blowoff.
- Regulatory Crackdowns: New laws or enforcement actions targeting crypto companies or assets could spark sell-offs.
Investors must prepare for volatility, realize that timing bubbles perfectly is nearly impossible, and keep risk management strategies in place.
Actionable Summary
- Long-term holders selling Bitcoin is a strong bearish signal, historically preceding big crashes.
- The current liquidity environment remains highly accommodating, supporting asset prices.
- Buyer demand remains robust, driven by ETFs and treasury companies acquiring large Bitcoin positions.
- Price momentum shows warning signs as Bitcoin trades below critical moving averages for the first time since the rally.
- This mixture suggests Bitcoin is in or entering the blowoff phase of a typical bubble cycle.
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Frequently Asked Questions (FAQ)
Q1: What defines a Bitcoin long-term holder?
A1: Long-term holders are investors who keep Bitcoin for extended periods, typically over several months or years, staying patient through volatility.
Q2: Why is long-term holder selling important?
A2: Because they have a strong track record of buying low and selling high, their selling often precedes major market corrections.
Q3: How does liquidity affect Bitcoin price?
A3: Higher liquidity, usually from central bank rate cuts, means more money is available for risk assets, which can drive Bitcoin prices higher.
Q4: What is the mania phase in a bubble?
A4: It’s when speculative behavior, media hype, and rapid price gains create an unsustainable environment prone to a sharp crash.
Q5: Should I sell Bitcoin now given these signals?
A5: This is not financial advice. Investors should consider risk tolerance and market context, using signals like long-term holder selling as part of a broader strategy.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry risk and can result in significant losses. Always do your own research or consult a professional advisor.
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