Bitcoin has been navigating intense volatility, with its price falling below the $85,000 mark after briefly showing signs of recovery last week. The cryptocurrency has struggled to maintain key support levels, and investor sentiment has noticeably changed as a result. With increased selling pressure, many market participants are questioning whether Bitcoin’s downward trend will continue or if a reversal is on the horizon.

However, recent data suggests a key shift in market dynamics. Long-term Bitcoin holders, who have been selling large amounts of BTC in recent months, appear to have significantly slowed their distribution. This change in behavior could be an early indication of market stabilization, paving the way for a potential rebound.

Bitcoin Long-Term Holders Halt Large-Scale Selling

An important trend that has emerged in recent weeks is the behavior of long-term Bitcoin holders. According to on-chain analyst Axel Adler Jr., these holders have completed their distribution phase, meaning they are no longer offloading BTC at the same rate.

Long-term holders play a crucial role in Bitcoin’s price stability. When they sell large amounts of BTC, it increases supply in the market, often leading to price declines. Conversely, when they stop selling and begin accumulating again, it reduces market supply and can contribute to upward price movement.

On-chain data suggests that the distribution by long-term holders was one of the most significant in recent history, with over 1.7 million BTC sold since Bitcoin reached the $60,000 price level. However, the Net Position Change indicator for long-term holders has now returned to neutral, suggesting that selling pressure has subsided.

A Shift in Market Supply Could Drive a Bitcoin Recovery

Historically, when long-term holders stop selling, it often signals the end of a market correction. Reduced selling pressure means fewer BTC are available on exchanges, which can lead to a supply squeeze if demand starts increasing. This shift could set the stage for Bitcoin to stabilize and potentially regain lost ground.

Axel Adler noted that Bitcoin’s activity metrics have shifted significantly, moving from a strong selling trend to a more balanced market environment. This suggests that investors who previously offloaded BTC are now waiting to see how market conditions evolve.

If Bitcoin demand picks up, either from institutional investors or retail buyers, the reduced supply could push prices higher. This pattern has played out in previous bull cycles, where long-term holders accumulate during downturns before Bitcoin’s next major rally.

Declining Exchange Inflows Indicate Weaker Selling Pressure

Another key metric pointing to a potential shift in sentiment is the reduction in Bitcoin exchange inflows. When investors move large amounts of BTC to exchanges, it often indicates they are preparing to sell. However, recent data shows that these inflows have dropped significantly.

The 30-day moving average of Bitcoin deposits on exchanges has declined from 3.8% to 1.4%, indicating that fewer investors are looking to sell. This reduction in supply on trading platforms could ease downward pressure on Bitcoin’s price, making it more resilient to further declines.

Current Bitcoin Price Action and Market Outlook

At the time of writing, Bitcoin is trading around $81,995, reflecting a 5% decline in the last 24 hours. Despite the price drop, trading volume has surged by over 24%, suggesting that investors are actively responding to the recent dip. Some may be taking advantage of the lower price to accumulate BTC, anticipating a rebound in the near future.

If the trend of reduced selling pressure continues, Bitcoin could stabilize around current levels before making a move higher. However, macroeconomic factors, such as interest rate policies and broader financial market conditions, will also play a role in shaping Bitcoin’s trajectory in the coming weeks.

Conclusion

The recent slowdown in selling activity among long-term Bitcoin holders is an encouraging sign for the market. With fewer BTC being distributed and exchange inflows decreasing, Bitcoin may be approaching a critical turning point. If demand increases, a supply squeeze could help push prices higher. While uncertainty remains, these shifting market dynamics suggest that Bitcoin could be setting the stage for its next major move.