Sell The News: Bitcoin Short-Term Holders Participate In $2 Billion Selloff

On-chain data shows that Bitcoin short-term holders have deposited $2 billion in BTC to exchanges, the fourth largest amount in the last two years.

As analyst James V. Straten explained in a new post on X, the BTC short-term holders have potentially participated in a very sizeable selloff recently. The “short-term holders” (STHs) are the Bitcoin investors who bought their coins within the last 155 days.

The STHs comprise one of the two main divisions of the BTC market based on holding time; the other segment is called the “long-term holder” (LTH) cohort and includes the holders who mature past the 155-day cutoff.

Statistically, the probability that a holder would sell or move their coins on the blockchain drops the longer they keep them dormant. As such, the STHs are more likely to participate in selling at any point than the LTHs.

This behavior of the STHs is usually especially apparent whenever the cryptocurrency observes a sharp rally or crash, as these fickle-minded investors can’t help but fall prey to the FOMO or FUD of the situation.

One way to track whether the STHs are selling or not is through their exchange inflows. Investors may deposit to these central entities when they want to sell, so the volume going to these platforms can naturally provide some measure of the degree of selling pressure the holders are currently exerting.

Now, here is a chart that shows the trend in the Bitcoin STH transfer volume going towards exchanges (in USD) over the past couple of years:

As displayed in the above graph, the Bitcoin volume going from the wallets held by the STHs toward the exchanges has registered a spike recently. “Yesterday, over $2B worth of Bitcoin got sent to exchanges from STHs,” notes Straten.

From the chart, it’s apparent that during the last couple of years, there have only been three instances where the market saw these weak hands transfer more significant amounts to these platforms.

According to the analyst, $1.3 billion of the total $2 billion inflow volume from the STHs involved coins carrying some profits. While the rest, $750 million, moved at a loss.

If these inflows were indeed for selling, it would appear that both types of sellers were in the market during the spike: those capitulating at a loss and those harvesting their profits. Straten remarks that the profitability ratio of this inflow volume is a bit suspicious, as the asset mostly moved flat or negative during this period.

This potential selloff from the STHs has come as the Bitcoin spot ETF is not far from being decided by the US SEC. The commission’s X account was also compromised earlier, and someone posted a fake approval announcement using it, to which the market reacted strongly.

Given the timing of the inflows, it would appear that the BTC STHs expect the event to be a sell-the-news type of deal, so once the decision is made, more inflows could follow.

At the time of writing, Bitcoin is trading at around $45,200, up more than 4% in the past week.