Bitcoin selling pressure and the 2025 outlook

Overview: Selling by early holders pressures Bitcoin

Bitcoin’s recent pullback from six-figure highs toward the mid-to-high five-figure range has been driven in large part by long-term holders taking profits. On-chain indicators point to heavy distributions from legacy wallets that accumulated at very low cost bases, a dynamic that has overwhelmed fresh institutional demand and left the market vulnerable to further downside in 2025.

What on-chain data is showing

Multiple on-chain metrics offer a consistent narrative: profit-taking by long-term wallets, waning marginal buying power from new entrants, and elevated leverage in derivatives markets. Key signals include:

• Large transfers from cold storage and long-held wallets to active addresses, consistent with realization events by early adopters.
• An elevated realized profit pool among legacy holders — many of whom have cost bases far below current prices — which creates a substantial supply overhang when they opt to sell.
• Exchange and futures metrics that still show meaningful leverage usage, increasing the risk of forced liquidations should prices weaken further.

Cost-basis dynamics

Analysis of long-duration wallet cohorts suggests a bifurcated cost basis across the market. Early adopters who accumulated years ago have very low realized costs and are registering large paper gains today. Middle-era holders — those who entered after the prior major bull runs — have higher cost bases and remain sensitive to price moves. This mixture produces asymmetric selling pressure when early holders decide to monetize gains.

Institutional flows have helped but not fully offset selling

Spot Bitcoin investment products and large corporate treasuries provided a significant bid earlier in 2025, channeling fresh demand into the spot market. While these flows supported higher prices during the first half of the year, inflows have moderated, leaving the marketplace exposed when long-term holders reduce their positions.

Even when institutional accumulation reaches sizable monthly inflows, the distribution of selling — concentrated among a relatively small number of very large wallets — can overwhelm that demand. In practice, the net effect depends on timing: steady ETF-style accumulation can absorb routine selling, but concentrated, high-volume sell days can still push price materially lower.

The market cycle: a “shoulder” phase

Cycle-sensitive indicators — such as realized profit-and-loss measures smoothed with a one-year window — show Bitcoin occupying what analysts call a “shoulder” phase. This stage historically sits between the peak of a bull cycle and the trough that precedes the next accumulation period.

Characteristics of the shoulder phase include:

• Limited upside potential relative to prior parabolic expansions.
• Higher probability of volatility and intermittent corrections.
• Lower valuation multiplier effects where new dollars into the market produce smaller proportional increases in market capitalization.

Under these conditions, the market tends to be range-bound or slowly drifting rather than sustaining rapid, broad-based rallies.

Valuation multiplier and leverage

Historically, early-stage bull markets have featured a strong valuation multiplier: each incremental dollar of demand drove outsized market-cap growth. That effect appears muted in 2025. Combined with persistent leverage in perpetual futures and concentrated long positions, the market is more susceptible to drawdowns triggered by shifting sentiment or liquidity shocks.

Potential downside scenarios

While a full-scale crash remains an extreme outcome, technical and on-chain evidence support scenarios where meaningful corrections are possible. Market observers highlight the following plausible paths:

• Moderate correction: a 15–30% pullback from recent highs as realized selling and short-term profit-taking intensify.
• Range-bound drift: price remains trapped between established support and resistance levels as inflows and outflows roughly balance.
• Sharp contraction (low-probability): a deeper sell-off precipitated by sudden deleveraging in futures markets or a large coordinated sell from several legacy wallets.

For example, a 20–30% correction off six-figure levels would place the price back near prior consolidation zones, consistent with historical retracement behavior during the shoulder phase.

Why the dynamics matter for traders and investors in 2025

Understanding the interplay between legacy whales and institutional buyers is essential for positioning in 2025. The market’s immediate direction is no longer driven solely by headline inflows; supply dynamics from large, profit-rich holders now carry equal or greater weight.

Key implications:

• Timing matters: institutions that accumulate steadily may still be rewarded over months, but short-term traders must account for episodic supply shocks.
• Risk management is crucial: elevated leverage and neutral valuation multipliers mean stop-loss discipline and position sizing should be tighter than in earlier, more benign cycles.
• On-chain and exchange metrics should be primary inputs for conviction, not just price charts or macro narratives.

Which metrics to monitor now

Market participants should watch a set of on-chain and market indicators to assess evolving risk and opportunity:

• Long-duration wallet flows: large transfers from cold storage to exchanges or active addresses can presage selling pressure.
• Realized PnL trends (365-day smoothing): shifts toward the shoulder phase signal constrained upside and higher correction risk.
• Net flows into spot investment products: sustained inflows help absorb selling, while outflows increase vulnerability.
• Futures long-short ratio and open interest: sudden drops in long exposure or spikes in short positioning can foreshadow sharp moves.
• Exchange leverage ratio: rising leverage raises liquidation risk in a declining market.

Macro backdrop and 2025 context

Beyond on-chain forces, macroeconomic and regulatory developments in 2025 continue to influence Bitcoin’s path. Central bank policy, inflation trends, and broader risk appetite shape institutional allocations to digital assets. Some relevant 2025 themes include:

• Shifting rate expectations: markets in 2025 are sensitive to signals about rate cuts or extended tightening, which impact cash yields and risk asset valuations.
• Liquidity dynamics: periods of tighter liquidity often coincide with increased volatility in crypto markets, amplifying the effects of concentrated selling.
• Regulatory clarity: progress or setbacks in regulatory frameworks for digital-asset products can materially affect institutional demand and retail participation.

Collectively, these forces mean that on-chain selling from early holders can interact with macro turns to produce outsized short-term moves.

Practical guidance for market participants

Given the current environment, traders and investors can consider these practical steps:

• Emphasize data: incorporate on-chain metrics and exchange flows into position decisions rather than relying solely on price action.
• Diversify entry points: employ dollar-cost averaging to mitigate timing risk when allocating to Bitcoin amid a potential shoulder-phase consolidation.
• Limit leverage: reduce exposure in high-leverage instruments and set conservative stop-loss levels to withstand episodic volatility.
• Monitor institutional flows: track net inflows into spot investment products and corporate treasury announcements for signs of renewed demand.

Outlook

For 2025, the most likely near-term scenario is continued range-bound action punctuated by corrections driven by legacy-holder profit-taking. Institutional demand remains an important stabilizer, but until selling from low-cost holders decelerates or fresh, large-scale buyers emerge, the market faces limited upward momentum.

Investors should adopt a measured, data-driven approach. Monitoring the convergence of on-chain supply signals, exchange leverage, and macro developments will provide the best framework for navigating the current cycle phase.

Final note

As always, market conditions can evolve rapidly. Those who combine rigorous risk management with real-time on-chain and market monitoring will be best positioned to respond to opportunities and manage downside exposure in 2025.

Disclaimer: This post is a compilation of publicly available information.
MEXC does not verify or guarantee the accuracy of third-party content.
Readers should conduct their own research before making any investment or participation decisions.