Who Really Sold The Dip? Insights from On-Chain Data Reveal Bitcoin's True Sellers

Bitcoin has experienced a pullback to around the $85,000 mark, which is a vital support area that bulls need to defend to avoid a further downturn. After struggling to reclaim higher levels, trading activity has slowed, and volatility has diminished, highlighting a market environment marked by uncertainty and fear.

Key Takeaways

Bitcoin's price retraced to $85,000, a critical support level amid a bearish sentiment in the market.
A CryptoQuant report indicates that the recent dip was primarily caused by Short-Term Holders (STH) taking profits, rather than Long-Term Holders (LTH) selling off.
The current market behavior reflects adjustments and risk management rather than a fundamental loss of confidence among long-term investors.
The critical $85K level must be maintained to avoid a deeper retracement, while reclaiming the $90K-$92K zone could signal a return of bullish momentum.

According to a recent report by CryptoQuant, Bitcoin’s decline from the approximately $88,200 level toward $85,000 offers insights into market behavior that may not be immediately apparent. Analyzing exchange inflow data reveals that the drop was not the result of long-term investors selling off their holdings, which typically exacerbates bear markets.

Historically, bear markets tend to accelerate when long-term holders start distributing their assets. The lack of such selling suggests that the current pullback is more about short-term positioning adjustments and risk management, rather than an outright loss of confidence from long-term investors. As Bitcoin approaches the $85,000 mark, the market sentiment is weighing price support levels more than outright bearish indicators.

Who Really Sold The Dip? Insights from On-Chain Data Reveal Bitcoin's True Sellers

The overall sentiment in the cryptocurrency market has deteriorated significantly, with more analysts sharing concerns about the potential for a prolonged bear market that could extend into the following year. In light of this situation, it becomes increasingly important to identify who is actually behind the selling, rather than just focusing on the price movement alone.

Understanding the Role of Short-Term Profit-Taking

The CryptoQuant analysis conducted by Crazzyblockk details who was behind Bitcoin's recent price pullback. On December 15, as BTC hovered around the $88,200 mark, Short-Term Holders sold roughly 24,700 BTC on exchanges. Notably, 86.8% of these transactions were profitable, while only 13.2% resulted in losses. In monetary terms, profits from STH inflows totaled over $1.89 billion, significantly outweighing losses from those selling at a deficit. This suggests that most sellers were near-term investors exiting positions while the market was still strong, rather than panicked sellers who were succumbing to market pressures.

Bitcoin Long-Term Holder P/L Inflow Volume | Source: CryptoQuant

When the price declined on December 16 towards the $86,000 region, total STH inflows fell sharply to about 3,900 BTC. Though this smaller inflow showed losses, the limited size indicates exhaustion in selling, rather than a spike in selling pressure. While the ratio of realized losses increased, the total volume of sales did not change dramatically, an important aspect often missed in superficial market analyses.

Long-Term Holder activity further supports this optimistic interpretation. Over the same timeframe, inflows from LTH saw a decline from roughly 326 BTC to just 50 BTC, indicating there was no significant capitulation or major distribution from this segment. Overall, the data illustrates that the market is experiencing a cooling phase driven by short-term profit-taking, rather than a major influx of sell pressure from long-term holders.

Bitcoin’s Weekly Price Structure and Key Support Levels

Bitcoin has sharply declined from its cycle highs and is currently consolidating within the $85,000 to $88,000 range, a technically significant area. The price is interacting with the rising 100-week moving average, which has served as a dynamic support level throughout the overall upward trend since 2023. Thus far, buyers are putting forth efforts to sustain this level to prevent a deeper weekly close below it.

BTC consolidates around key support level | Source: BTCUSDT chart on TradingView

From a structural perspective, the market has transitioned from a phase of strong growth into a corrective period. The breach of the 50-week moving average during this pullback indicated a shift from price discovery driven by momentum to a phase of consolidation and mean reversion. Nevertheless, the longer-term trend remains intact as long as Bitcoin stays above the 200-week moving average, which is currently situated well below the current price level.

During this retracement, trading volume has decreased, implying that selling pressure is not dramatically increasing. This supports the idea that the current movement is more corrective than it is distributive. Should Bitcoin fail to maintain the $85,000 level, it could lead to a deeper decline toward the low $70,000 range. Conversely, reclaiming the $90,000 to $92,000 zone will be crucial for restoring bullish momentum and structural integrity in the weekly outlook.

Featured image from ChatGPT, chart from TradingView.com