Bitcoin Price Discovery Driven By Unique Holder Phenomenon

Key takeaways:

• A unique divergence emerged as long-term Bitcoin holders took profits, while the overall supply held by this cohort continues to rise.

• Bitcoin’s volatility has dropped to the 10th percentile, its lowest range in a decade, despite prices trading near all-time highs.

Bitcoin (BTC) price is hovering just a few percent below its all-time high of $111,800, and data from onchain analytics provider Glassnode reveals a “unique dynamic of this cycle,” as long-term holders continue to dominate wealth distribution, even at the later stage of the bull market. This behavior deviates sharply from previous cycles.

The data highlights that long-term holders (LTHs)—those holding BTC for over 155 days—are realizing significant profits, with their net realized profit/loss peaking at $930 million per day. Despite this, the overall supply held by LTHs is still rising. This is unprecedented at this stage of a rally, where LTH supply tends to decline due to widespread profit-taking. 

This dynamic implies that while some long-term investors are selling, an even larger volume of coins matures into long-term status. The report termed this a “unique duality” in market structure, where selling pressure is outweighed by ongoing accumulation. This change in holders’ behavior has been largely attributed to institutional investors and US spot Bitcoin ETFs, which favor long-term custody. 

Further evidence of this late-cycle behavior appears in the realized profit/loss ratio, currently at 9.4, indicating that most long-term coins spent have been at substantial profit. Historically, such levels coincide with market euphoria and often precede a local or cycle top, although they can persist for months if demand sustains.

Related: Michael Saylor rejects crypto winter fears, says Bitcoin ‘going to $1M’

Bitcoin volatility tightens and could dictate price discovery

Bitcoin’s current volatility profile presents a paradox. On one hand, realized supply density, which measures how concentrated Bitcoin’s ownership is near the current price, has climbed in recent weeks. This signals that several investors bought around the $105,000-$110,000 level. In such tightly clustered environments, minor price swings can trigger outsized emotional or trading responses, raising the risk of sudden volatility.

On the other hand, contrary signals are coming from the derivatives market. At-the-money implied volatility (ATM IV)—a gauge of expected future price swings derived from Bitcoin options pricing—continues to fall across all timeframes. This suggests that traders aren’t bracing for significant price dislocations soon.

Likewise, data from Ecoinometrics shows Bitcoin’s weekly volatility has now dropped to the 10th percentile, lower than 90% of weeks in the last ten years, despite Bitcoin setting a new all-time high and rallying strongly in May. It could signal that Bitcoin may be entering a new regime, reflecting strong performance without erratic price swings, which is an attractive setup for institutional investors focused on risk-adjusted returns.

With BTC price perched at the top of a dense supply cluster and institutional inflows anchoring demand, the market appears stable, but tightly wound. If new demand outpaces profit-taking, Bitcoin could burst through its volatility ceiling. But if sentiment cracks, the pullback may be sharper than expected.

Related: How high can Bitcoin price go?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.