Bitcoin’s BTC bull market has stalled, and how.

Despite a surge in spot ETF inflows, stablecoin market caps, and positive regulatory developments in the U.S., the leading cryptocurrency by market value continues to trade directionless, fluctuating between $100,000 and $110,000.

It’s been a record 42 straight days of back-and-forth trading above the $100 mark, and the question is: Who has been selling BTC and quietly counteracting the ETF inflows amid mounting concerns about the U.S. fiscal situation?

According to Alexander Blume, managing partner at the SEC-registered investment adviser Two Prime, BTC is facing a unique crosswind of participant composition as it transitions from speculative buyers to long-term investors.

“Amidst the recent geopolitical turmoil, it makes sense that speculators and leverage traders are taking risk off the table. At the same time, new long-term investors are buying the dip,” Blume told CoinDesk. “It seems about right that we are currently at an equilibrium of these groups.”

Blockchain data tracked by Glassnode shows that wallets with a history of holding coins for less than a year have recently increased their profit-taking. On Monday, these wallets accounted for 83% of the total realized profit. Furthermore, wallets holding coins for six to 12 months alone contributed $904 million to the selling pressure in the market, the second-highest year-to-date total.

The selling by short-term holders follows an even more aggressive profit-taking operation by long-term holders in May and early this month. According to Glassnode, the realized profit of wallets holding coins for over 12 months reached a peak of $1.2 billion last week. Last week, this cohort realized just $324 million in profits.

“Long-term OG investors continue to sell into the steady ETF-driven demand, effectively absorbing inflows and keeping price action in check. This dynamic has led to a compression in volatility, but a breakout is inevitable,” Markus Thielen, founder of 10x Research, said in a note to clients Thursday.

Miners offload BTC

Miners, or those producing bitcoin, have also been contributing to the selling pressure, according to data source IntoTheBlock.

The balance held in miner wallets has declined to roughly 1.91 million BTC from 1.94 million at the end of May, indicating that these entities offloaded approximately 30,000 BTC in 20 days.

“Miners have to continually sell, and believe it or not, some long-term holders continue to sell gradually as they manage their USD liabilities. The key thing is volume – is it sold or bought on high volume? It is noise and speculative flows that can revert very quickly,” Philippe Bekhazi, CEO of crypto platform XBTO, told COinDesk.

Note that miners’ share in total spot market volume is minuscule and has hit the lowest since 2022.

Accumulation stalls for next-best alternatives

Overall, the substantial accumulation by both whales and small addresses observed during bitcoin’s initial run higher from the early April lows near $75,000 has stalled since prices broke into six figures.

“Those same accumulation patterns began to weaken once BTC breached $100k. The reason the price slowed down is likely due to the availability of next-best alternatives. Funding rates were rallying hard, and having delta-neutral positions earning 15-30% APY likely seemed attractive enough to de-risk on a directional basis,” Benjamin Lilly, founder of Jarvis Labs, noted.

The delta-neutral trades involve shorting perpetual futures and simultaneously purchasing the asset in the spot market when futures trade at a premium to the spot price. The non-directional arbitrage strategy enables traders to capitalize on price differentials while mitigating risks associated with price volatility.

Jimmy Yang, co-founder of Orbit Markets, said that bitcoin maturing into a more stable asset class means it may not necessarily generate outsized returns. That has likely prompted some holders to divest into other assets.

“While the directional upside remains, investors can no longer expect 10x or 100x returns in a short period. As a result, we’ve seen some long-term holders begin to divest a portion of their BTC holdings to diversify into other asset classes such as equities, gold, and private placements — a move that makes sense from a portfolio allocation perspective,” Yang told CoinDesk.

What next?

According to Yang, the market may not offer much excitement in the near-term, as the cryptocurrency continues to trade in tandem with equities and broader risk sentiment.

“Both asset classes are hovering near all-time highs, and if equities break higher, BTC is likely to follow. With the summer lull setting in, market activity is expected to remain subdued in the near term,” Yang noted.

Blume said that the BTC market may cool off a little, having seen prices surge from $75K to over $100K in the early weeks of this quarter.

“It’s also to keep in mind that Bitcoin rallied from 78k less than two months ago, so I’d expect a cool off anyway. It’s telling that the dips in price are quite shallow and are a sign of strength for the next leg up,” Blume said.

According to Thielen, the key levels to watch are $102,000 on the downside and $106,000 on the upside.