Bitcoin Is Rangebound Heading Into Q4 As Monetary Easing Commences

Cliff Notes:

• Bitcoin has been rangebound for more than ten weeks as long-term holders distribute into strength while institutions accumulate.
• Seasonality is turning in bitcoin’s favor, with October and November historically its two best months.
• The Fed’s easing cycle and loosening credit conditions tilt the macro backdrop bullish heading into Q4.

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Bitcoin has been rangebound for over two months, almost completely uninterrupted. This has proven to be a strong area of overhead resistance, lining up with last year's extended consolidation period throughout the summer and into early fall. Many have jumped to the conclusion that this consolidation period is the result of paper bitcoin, which is the umbrella term used by skeptics to explain how large inflows from ETF buyers and treasury companies haven't been accompanied by a commensurate increase in the price.

Taking a look under the hood, the most plausible explanation is actually quite simple, and one that we've seen before: supply from long-term holders and demand from institutions offset each other, with neither side strong enough to push the price materially beyond the range. This has created a deadlock where the price chops around due to a lack of volume from either side.

This is a hallmark of prior BTC cycles. Long-term holders, defined as those who’ve held for 155+ days, began distributing the moment bitcoin broke above $110,000, as you can see on the right side of this chart in orange:

That cohort, which had been steadily accumulating during the run-up from ~$75k to $110k, flipped to net sellers once the $110,000 milestone was breached. Note that the distribution from these holders has decelerated rapidly in recent weeks, suggesting we're nearing a point of seller exhaustion for this cohort at this price level.

Long-term holders (LTHs) tend to sell into strength and accumulate as the market draws down. That pattern has occurred three times over the last 21 months: LTHs sold as BTC rose from $45k to $70k, again on the way to $100k, and once more now that we've crested $124k. This rollercoaster-esque pattern can be seen in orange on the chart above.

In the same vein, coins dormant for more than two years, seen on the chart in blue, have been selling since early 2024. Those coins are composed of both OGs and prior/early-cycle entrants. The pace of that selling has been significant, yet it isn’t out of character. Coins rotate out of the hands of those who are likely very deep in profit to new market entrants, establishing an increasingly higher marketwide cost basis for BTC to spring from. What appears boring is actually significant for bitcoin's stability when the next leg of the bull market commences:

On the other side of the equation, we have institutions: both the ETFs buying for their clients and BTC treasury companies, which have been buying aggressively at the same time that supply is being distributed by long-term holders. This chart comes from Charles Edwards of Capriole Investments. Now you can clearly see the battle taking place. Institutions, the Treasury companies and ETF issuers, are buying in, while long-term holders are bailing out. The market has found equilibrium in this band because one cohort is offloading while another is absorbing:

This tug-of-war is why bitcoin is stuck, but it won’t last forever. Already, we’re seeing signs that long-term holder distribution is cooling. Net outflows from LTH supply have slowed, which means fewer coins are being sold into the market. Institutions, by contrast, have shown no sign of letting up. ETFs are evergreen buyers, particularly as rates come down and people venture out on the risk curve. Treasuries are opportunistic, constantly shorting the dollar through various instruments to purchase bitcoin at an accelerating pace, making for an increasingly structural source of demand. The scales are tipping in favor of net accumulation.

Seasonality is the other piece of the puzzle. September is historically bitcoin’s weakest month, and we're coming off of a dreadful August where BTC fell 7.4%. October and November are its two strongest, with average returns of +22.9% and +35.7%. These months have consistently acted as accelerants, propelling bitcoin higher as cyclical supply dynamics intersect with favorable macro conditions. This has been particularly acute over the last two years. With September nearly behind us, the seasonal tailwind will be at bitcoin's back:

The macro backdrop is favorable, too. The Fed has begun cutting its policy rates again, with its first 25-bps cut last week marking the official turn from restraint to easing. As credit conditions loosen, so long as the economy remains intact, investors will venture out on the risk curve. Last cycle, bitcoin was one of the highest-beta beneficiaries of monetary easing. Last year, as the Fed began its first set of maintenance cuts through the end of Q3 into Q4, bitcoin once again performed well. The same dynamic is likely to play out again, especially if growth remains resilient.

All of this points in one direction: the deadlock will likely draw to a close soon. Bitcoin isn’t stuck so much as it is digesting supply at a key psychological milestone. Entities that've held BTC for an extended period are taking profits, as they always do. Institutions are buying on the other side of that equation. Once distribution is over and demand keeps pressing higher, the balance will break.

The question isn’t whether bitcoin can escape the range but rather how much energy has been stored up during this ten-week consolidation. In past instances of bitcoin being rangebound during a bull market, the longer the consolidation, the more violent the eventual breakout. With long-term holder distribution abating, persistent institutional demand, bullish seasonality, and a friendly Fed all aligned, the odds favor another explosive leg higher in Q4.

Take it easy,
Joe Consorti

Horizon helps homeowners stack Bitcoin using their home equity, without debt, interest charges, monthly payments, or term limits. To see your home's bitcoin potential, visit joinhorizon.com.

Disclaimer: The information provided is for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other advice. Investing in Bitcoin and other digital assets involves significant risk due to their high volatility and potential for substantial losses. Readers should perform their own research and consult with a qualified financial advisor before making investment decisions. Nothing in this blog constitutes an offer or solicitation to buy or sell securities or investment products. Horizon does not offer financial products directly nor receive referral incentives.