Crypto whales and long-term holders are actively cashing out, creating consistent selling pressure that is suppressing market prices. This dynamic is drawing comparisons to the market conditions that followed the 2000s dot-com stock market crash, according to analyst Jordi Visser.
Visser observed that the current price action in the crypto market strongly resembles the period after the 2000 dot-com stock market bubble burst. That event led to a significant decline in stock values, with some falling by as much as 80%, followed by a prolonged period of consolidation lasting 16 years before they eventually recovered to their previous highs.
During the dot-com crash aftermath, venture capitalists who had invested in technology stocks were often compelled to hold their investments due to mandated lock-up periods. They were essentially treading water and then, as soon as they were permitted, desperately sold their holdings into the market. Visser stated:
Many stocks were trading below their IPO prices. We have a similar situation going on right now. VC and insider investors, desperate for liquidity or redemption, sold into every rally. That's what's happened to me for Solana, Ethereum, for every altcoin, and for Bitcoin.
Visser clarified that he does not anticipate a 16-year recovery period for crypto prices. Instead, he used the analogy of the dot-com era's aftermath to illustrate the sell-side pressure dynamics currently at play in the crypto market. He believes that the crypto market is nearing the end of this consolidation phase, with a maximum of one year remaining.
This analysis comes at a time when fears of a crypto and Bitcoin (BTC) bear market, which began in October, have led several analysts and investment firms to revise their most optimistic price predictions downwards.
Has Bitcoin Bottomed Out Around the $100,000 Level?
Some analysts suggest that the price of BTC is showing signs of bottoming out around the $100,000 mark. However, others express concern about a potential drop to $92,000 if selling pressure continues to intensify.
Typically, whales and long-term holders tend to cash in their assets at all-time highs, and whale selling itself is not inherently problematic, according to CryptoQuant analyst Julio Moreno.
The selling pressure exerted by whales and long-term holders only suppresses asset prices when there is insufficient new demand to absorb the supply being dumped onto the markets. Moreno commented:
"Since October, long-term holder selling has increased; nothing new here, but demand is contracting, unable to absorb long-term holder supply at a higher price."