Bitcoin Holders Just Cashed Out 110,000 BTC in Profits: Is a Bigger Price Drop Coming?

• Holders realized 23,000 BTC in net profits on August 21 alone, the largest single-day profit realization of 2024.
• Bitcoin climbed from under $65,000 on August 19 to nearly $80,000 within two days, then faced rejection at $82,400.
• Spot demand expansion has collapsed into contraction, and US investor demand has turned negative for the first time in months.

• 110,000 BTC total profit-taking over several weeks following August rally
• $82,400 rejection level before pullback to $79,600 in recent days
• 70 Bull Score reading, above the 60 threshold for sustainable bull markets

Bitcoin holders executed one of the year’s most aggressive profit-taking campaigns in late August, liquidating roughly 110,000 BTC over a compressed timeframe as the market absorbed an explosive rally from sub-$65,000 levels.

CryptoQuant’s analysis flags this concentrated selling as a critical juncture: while such profit-taking is technically bullish, it occurs “into strength” following rapid appreciation, historical precedent suggests that if this pace accelerates, the asset faces material downside risk.

The timing coincides with a sharp deterioration in demand metrics across both global and US-specific markets, creating a scenario where institutional investors must weigh near-term correction risk against longer-term bull market structural support.

August 21 Sets Record for Single-Day Profit Realization at 23,000 BTC

The August 19 inflection point marked the start of bitcoin’s most aggressive two-day rally in months. Starting from just under $65,000, the asset climbed to nearly $80,000 in a matter of hours, triggering massive profit-taking among long-term holders and traders positioned at higher entry points.

On August 21 alone, net profit realization hit 23,000 BTC, the largest single-day profit liquidation recorded in 2024 to date and substantially above typical daily volumes.

CryptoQuant’s weekly report characterizes this behavior as a “hallmark of a bullish cooldown,” distinguishing between the positive signal that profits are being taken at strength versus the cautionary note that concentrated, rapid-fire selling can cap upside momentum in the near term.

Bitcoin initially responded as expected, dipping following the August surge, only to stage a recovery attempt by late August. The asset climbed back above $82,000 on Friday before meeting resistance on the heels of a US employment report, leaving it below $80,000 as institutional investors recalibrate exposure.

Historical precedent is unambiguous: when concentrated profit-taking follows a major rally and investor conviction wavers, bitcoin has historically entered correction phases rather than sustained rallies.

Spot Demand Expansion Collapses as Coinbase Premium Turns Negative

Parallel to the profit-taking surge, apparent spot demand metrics have deteriorated sharply. CryptoQuant observed that bitcoin’s spot demand expanded by 43,000 units in the immediate aftermath of the August rally, marking the fastest growth pace recorded in 2024, but that momentum has evaporated entirely.

The metric has reversed into contraction, signaling that the flood of institutional and retail buying that fueled the initial breakout has dried up.

More concerning for US-focused institutional investors, the Coinbase Premium, a key barometer of demand from American traders relative to the broader market, has slipped into negative territory at -0.05. This metric measures the price differential between bitcoin on Coinbase, the largest US spot exchange, and other trading venues; negative readings indicate that US buyers are withdrawing bids.

Analysts note that three prior instances of similarly soft US spot demand in 2024 coincided with capped rallies and subsequent downward pressure, establishing a pattern that institutional traders monitor closely.

The Coinbase Premium’s shift into negative territory suggests that the domestic buying pressure underlying the August rally has structurally weakened.

Bull Market Structure Remains Intact Despite Near-Term Momentum Decline

However, the deteriorating short-term picture does not automatically invalidate bitcoin’s broader bull market foundation. CryptoQuant’s Bull Score currently stands at 70, well above the 60 threshold historically associated with sustainable bull markets.

This reading suggests that despite cooling momentum and weakening demand indicators, the macro framework supporting higher prices has not broken down. The analysts explicitly cautioned against interpreting the profit-taking and demand contraction as confirmation of a shift into a bearish regime.

A critical structural level for institutional investors remains the 365-day moving average, currently positioned at approximately $83,000. This is the threshold that historically marks the “official” entry point into bull market conditions, and notably, the same level that arrested bitcoin’s advance in May before triggering a correction.

Bitcoin’s failure to close above $83,000 on the most recent attempt, being rejected instead at $82,400, mirrors the May pattern and suggests that resistance at this level may remain formidable unless demand conditions improve materially.

The analyst consensus holds that bitcoin remains “in the early phase of a new bull market,” meaning that the current profit-taking and demand weakness, while tactically concerning, may constitute normal consolidation within a larger uptrend rather than the beginning of a major reversal.

The challenge for institutional positioning is determining whether the current pullback will stabilize above $79,000-$80,000 or accelerate into a more substantial correction, a question that cannot be definitively answered until either renewed demand appears or the selling pressure exhausts itself.

Institutional investors should monitor three specific inflection points: whether the Coinbase Premium stabilizes or deteriorates further (signaling whether US demand recovers), whether apparent spot demand returns to expansion (indicating renewed institutional accumulation), and crucially, whether bitcoin can recapture and hold the $83,000 level, the 365-day moving average that has rejected advances twice this year and must be cleared to confirm the bull market’s durability.

US Institutional Inflows Reverse as Spot Demand Turns Negative

The profit-taking surge coincides with a sharp reversal in US spot bitcoin demand, which has moved into negative territory for the first time since May 2024. This marks a structural shift from the consistent inflow pattern that characterized the prior four months, during which US-listed spot ETFs accumulated approximately 180,000 BTC in net new holdings.

The timing of this reversal, occurring precisely as holders realized their largest single-day profits, suggests that institutional conviction may be fracturing ahead of the September Federal Reserve policy decision.

Global spot demand has also contracted into net outflows, a metric not observed since March 2024. When combined with the concentrated profit-taking and the failure to sustain a break above $82,400, the data pattern indicates that institutional buyers who drove the August rally are now stepping aside.

CryptoQuant’s flow analysis shows that this combination, simultaneous profit realization by long-term holders and demand collapse among new institutional buyers, has historically preceded corrections of 12 to 18 percent before the bull market structure reasserts itself.

Market participants are now monitoring whether the 70 Bull Score reading can be sustained if US inflows remain negative through the Fed’s September 18 policy announcement. A sustained period of institutional outflows below the current level would create technical vulnerability despite the absence of bear-market signals, forcing portfolio managers to recalibrate exposure ahead of potential rate guidance shifts.

Original reporting: cryptopotato.com