Long-Term Bitcoin Selloff Sparks Drawdown Risk Surge
Prominent long-term Bitcoin holders sold more than 400,000 BTC in October, driving the price below $85,000. Gold investor Peter Schiff warns this wave of selling marks Bitcoin’s “IPO moment” and could intensify future volatility and drawdown risk. Early adopters such as Owen Gunden and author Robert Kiyosaki liquidated major positions—Gunden offloaded 11,000 BTC (~$1.3 bn) and Kiyosaki sold $2.25 m after buying at $6,000. Exchange inflows remain elevated, signaling further sell pressure. Bitfinex analysts attribute the correction to profit-taking by whales and leveraged liquidations in the derivatives market. Meanwhile, retail investors may lack conviction during downturns, potentially amplifying losses. Sigma Capital’s Vineet Budki warns that retail selling could trigger up to a 70% price decline in the next bear cycle. Traders are closely watching Bitcoin liquidity indicators, whale movements and derivatives positioning for clues on whether selling pressure will ease or intensify.
Bearish
This development is bearish for Bitcoin in both the short and medium term. Historically, large-scale profit-taking by early adopters has often preceded significant corrections. During the 2017 bull run, for example, whale-driven selloffs forced prices down by over 30% in under two weeks. Similarly, the 2021 market peak saw major holders offload positions before a multi-month consolidation. The current sale of 400,000 BTC—alongside elevated exchange inflows and leveraged liquidations—suggests further downside pressure. Retail investors, who tend to panic-sell at key support levels, may exacerbate declines, as noted by Sigma Capital’s warning of a potential 70% drop in the next bear cycle. In the longer term, institutional accumulation and strong fundamentals may provide a floor, but the immediate effect is likely increased volatility and deeper drawdowns. Traders should monitor whale activity, exchange inflows and derivatives positioning for signals that selling pressure is abating before considering new long positions.