Bitcoin (BTC) has slipped into a distribution phase, with on-chain data signaling increased selling pressure among key holders.
This shift comes after a strong start to 2025, where BTC briefly reclaimed $100,000 before sliding to $95,590 at press time. Let’s unpack the implications of this phase and what it means for the market moving forward.
What Is a Distribution Phase?
A distribution phase occurs when investors, particularly large holders, begin selling their assets to realize profits. This often follows periods of accumulation and price growth, as participants lock in gains or adjust portfolios in response to market conditions.
On-Chain Insights
Accumulation Trend Score
Glassnode’s report highlights Bitcoin’s transition into a distribution phase, with the Accumulation Trend Score dropping to 0.21. This low score reflects net selling across most holder cohorts, a departure from the accumulation trend seen since October 2024.
- Whales’ Activity:
- Entities holding 10,000+ BTC have consistently distributed Bitcoin since September 2024.
- Wallets with 1,000–10,000 BTC have significantly increased selling over the past two weeks.
- These moves suggest profit-taking or reduced confidence among large holders.
Profit-Taking
The Adjusted Spent Output Profit Ratio (aSOPR) from CryptoQuant has risen to 1.04, indicating that most transactions are occurring at a profit. While this reflects healthy market activity, it may also signal a local peak if profit-taking accelerates.
Retail Investor Trends
Retail investors showed heightened activity as Bitcoin neared $100,000, with demand variations spiking over 30%. According to CryptoQuant analyst Darkfost, such retail surges often coincide with market tops.
Following Bitcoin’s high of $108,000 in late 2024, retail activity dropped by 16%, mirroring patterns seen in previous corrections.
| Metric | Current Value | Implications |
|---|---|---|
| Accumulation Trend Score | 0.21 | Reflects net selling across holder cohorts |
| aSOPR | 1.04 | Indicates profit-taking |
| Retail Demand Variation | +30% (Near $100K) | Retail spikes often coincide with market tops |
Cooling-Off Phase or Market Top?
Despite signs of distribution, some analysts view the current conditions as a cooling-off phase rather than the end of Bitcoin’s bullish cycle.
Supporting Metrics:
- Spent Output Profit Ratio (SOPR):
- The 7-day smoothed SOPR remains above 1, showing profitability but trending downward—a pattern historically followed by rebounds during bull runs.
- Miner Activity:
- The Miner Position Index (MPI) shows no major sell-offs. In fact, mining firms like Marathon Digital have been accumulating, indicating confidence in Bitcoin’s long-term potential.
- Network Fees and Funding Rates:
- Declining network fees point to reduced on-chain activity, while falling funding rates suggest tempered market sentiment, which typically precedes recoveries.
Market Outlook
Bitcoin’s current price of $95,590 positions it precariously near key support levels. Recovering the $95,000 mark earlier today is a positive sign, but sustained selling could push BTC toward deeper levels.
Key Levels to Watch:
- Resistance: $98,000 (Jan. 4 highs)
- A push toward this level could revive bullish sentiment.
- Support: $92,000
- Falling below this could lead to further declines, with minimal support until $87,000.
Bitcoin’s distribution phase suggests heightened selling among large holders and profit-taking by investors. While these signals might seem bearish, they could also indicate a market cooling-off period, potentially paving the way for renewed growth.
Investors should monitor on-chain data and key support levels closely as BTC navigates this critical phase.
