Why Bitcoin Might Experience Price Swings Despite the End of Long-Term Holder Sell-Off

Bitcoin's demand shows signs of improvement, yet the cryptocurrency is likely to experience volatility in the near future. After a prolonged sell-off since July, long-term holders (LTH)—investors who have held Bitcoin for over five months—are easing their sell-off activities. Meanwhile, the pressure from U.S. Spot Bitcoin ETFs is easing as well, though the outlook for January remains uncertain.

Key Takeaways

Long-term holders have reduced their Bitcoin sell-offs, which could indicate a market bottom or recovery.
Institutional Bitcoin selling has lessened, potentially aiding price recovery above $85,000.
Upcoming January events, including tax-related selling and critical decisions from financial institutions, may cause price fluctuations for Bitcoin.
Increased hedging activities suggest that significant players are preparing for price movements between $75,000 and $94,000.

Why Bitcoin could remain choppy despite the end of LTH sell-off

Understanding Bitcoin Demand Dynamics

The sell-off from long-term holders intensified to an average of over 400,000 BTC per month in mid-December but has since moderated and turned positive. Analyst DarkFost from CryptoQuant notes that this shift could indicate a potential bottom or recovery phase is on the horizon. Historically, such changes have often signaled the start of consolidation periods or even bullish recoveries, depending on broader market trends.

Bitcoin

Source: Glassnode

Additionally, U.S. Spot ETFs have also been net sellers since November, contributing to downward pressure on Bitcoin's price. However, as institutional sell-offs decrease, this could support a price rise above the $85,000 mark.

Bitcoin Price Flows

Source: Glassnode

Nonetheless, events in January may induce volatility that could restrain Bitcoin's price despite improved demand.

Risks Ahead in January

Bitcoin has recently fluctuated below $90,000 as significant investors sell at a loss to counterbalance tax obligations, according to Bloomberg ETF analyst Eric Balchunas. He added that Bitcoin's price activity resembles trades triggered by short-term tax motivations, rather than genuine market sentiment.

As January 15 approaches, the MSCI's decision regarding the delisting of Strategy and other Bitcoin treasury firms will be crucial. The market is anticipating potential removal of Michael Saylor’s strategy from the global index.

Bitcoin Price Analysis

Source: X

Subsequent updates, including the Federal Reserve's rate decision and a government funding deadline on January 28 and 30, could shape the cryptocurrency landscape for the first quarter of 2026. A positive market reaction could occur if the MSCI includes Strategy in its index and if the crypto bill progresses through the Senate. Conversely, if the funding deadline leads to another government shutdown, further delays to the crypto bill may arise, especially as the 2026 U.S. elections loom. The expected replacement of Fed Chair Jerome Powell with a candidate aligned with White House objectives may also impact monetary policy significantly.

Will Bitcoin Maintain $80,000?

Market positioning among large investors indicates a rise in hedging focused on the $80,000-$83,000 range, with put volumes signaling potential preparation for a price drop down to $75,000. Conversely, bullish bets appear at $88,000 and $94,000, suggesting that price movements may remain muted below $95,000 in the mid-term.

Bitcoin Hedging Chart

Source: Arkham

Final Thoughts

As Bitcoin navigates through a blend of improving demand and potential volatility, understanding these dynamics is essential for both new and seasoned investors. Keeping an eye on upcoming January events will be crucial for anticipating Bitcoin's price movements moving forward.