Bitcoin Faces Broad-Based Distribution as Whales Lead Sell-Off Near $112K

Executive Summary

On-chain analytics firm Glassnode reports that all Bitcoin cohorts, including whales and long-term holders, have shifted into a distribution phase, leading to significant selling pressure and price stagnation around $112,000 amid broader market volatility.

The Event in Detail

On-chain analytics from Glassnode indicate a decisive shift across all Bitcoin wallet cohorts into a distribution phase. This trend signifies increasing sell-side pressure across the market, led particularly by the 10-100 BTC group, often referred to as mid-sized whales. These holders, who accumulated positions earlier in the cycle, are actively taking profits, a move that is broad-based and not isolated to new entrants or a single large entity. Bitcoin recently traded around $111,500 to $112,000, following a mid-summer price spike.

Evidence of this distribution includes a recent profit-taking event where long-term holders realized approximately $1.96 billion in profits on a single day. This coincided with a notable price pullback. Further intensifying the selling pressure, long-term Bitcoin holders increased their asset sales, offloading 97,000 BTC, valued at approximately $10 billion, in a single day, marking the largest one-day sell-off by this group in the current year. Whale wallets have collectively sold over $4 billion worth of BTC in recent weeks, including one transaction of 35,991 BTC, approximately $4 billion, swapped into Ethereum, and a recent offload of 1,176 BTC ($136 million) to Hyperliquid on September 14. Dormant wallets from 2012–2013 have also reactivated, sending BTC to exchanges, which has increased the circulating supply and pressured near-term price stability.

Market Implications

The broad-based distribution across all investor cohorts implies that price support for Bitcoin could become more fragile if new demand fails to absorb the increased supply. Analysts suggest this widespread selling from long-term holders might precede a more significant price drop than observed in previous cycles. The market has also experienced substantial liquidations, including a staggering $1.7 billion across the crypto market and a record $480 million liquidation event in Bitcoin options, with max pain levels clustering around $110,000.

Furthermore, the U.S. Federal Reserve's 25-basis-point rate cut on September 17, 2025, exacerbated market volatility. The decision triggered a sharp reduction in Bitcoin's perpetual futures open interest (OI), which fell from 395,000 BTC to 378,000 BTC within days. Concurrently, the Exchange Supply Ratio (ESR) dropped to 0.029 on platforms like Binance, signaling a significant unwinding of leveraged positions and a shift towards long-term holding strategies. A low ESR also indicates a shrinking pool of available liquidity, which can amplify price swings during macroeconomic shocks. Bitcoin's price subsequently dropped 4.6% to $101,300 after the Fed revised its 2025 inflation forecast upward, underscoring the interplay between monetary policy and on-chain dynamics.

Expert Commentary

Glassnode analysts confirm a "neutral-to-distribution" behavior across all investor cohorts, suggesting many holders are either selling or holding, rather than actively buying. This trend reflects profit-taking following recent price increases and market hesitation at resistance levels. While Bitcoin fundamentals appear robust, signals from whales and long-term holders underscore the need for caution in the short term. The substantial realized profits by influential investors reveal strong selling pressure, often coinciding with local market tops, indicating that whales may be reducing their exposure before a potential correction.

Broader Context

The current market environment is marked by a "risk-off" mentality among investors, fueled by macroeconomic concerns such as looming U.S. government shutdowns and persistent inflation. The regulatory landscape surrounding cryptocurrencies remains a source of uncertainty, further contributing to investor caution and market repositioning. Historical patterns of long-term investors suggest accumulation when prices are low and selling for profit during upward movements. However, current trends indicate long-term holders have been selling earlier in this cycle compared to previous ones. This shift, combined with macroeconomic pressures and regulatory ambiguity, creates a fragile equilibrium in the Bitcoin market, urging investors to monitor key support levels and manage leverage proactively. Risks persist, particularly around the $115,200 support level, with market developments requiring close observation to anticipate potential corrections.