Since entering the net reduction phase on August 19, 2026, the supply of Bitcoin long-term holders (LTH) holding coins for over 155 days has continued to decline, but the reduction intensity has clearly shrunk in recent weeks: on August 30, the net amount of Bitcoin held by LTH decreased by approximately 105,900 BTC over 30 days; as of September 20, the net decrease of the same measure has narrowed to about 21,700 BTC, indicating a “hard brake” in on-chain selling pressure. More intriguingly, the price recently rose to around $81,200, but LTH-SOPR dropped from 1.096 to 0.994, suggesting that the chips moving in this price range were, on average, in a slight loss state—prices are rising, yet there are still long-term addresses moving chips at a loss, contrasting the traditional logic of “taking profits at highs.” CryptoQuant analyst Axel Adler Jr.'s on-chain analysis also indicates that the decline in LTH supply only represents the movement of relevant Bitcoins and does not necessarily correspond to actual sales. Under the premise that tax rules typically classify "disposal and realization of gains and losses" as taxable events, mere address-to-address migration does not equate to selling in terms of tax obligations and compliance disclosures. For ETFs and regulated funds that need to report liquidity and concentrated selling pressure risks, as well as compliance and risk control teams that use on-chain supply changes as input parameters, when LTH reductions slow significantly and LTH-SOPR is close to or below 1, whether this signal of "relieved selling pressure but still passive clearance of loss-making chips" should be viewed as an improvement in risk margins or a reminder regarding leverage, liquidity, and customer suitability thresholds has become a critical preliminary question that must be answered in the next exposure adjustment of risks.
From 100,000 to 20,000: LTH Reduction Hits the Brakes
From a timeline perspective, since August 19, 2026, long-term holders with over 155 days of holding have entered a phase of continuous net reduction, with their holdings declining for five consecutive weeks. The data from the on-chain 30-day window provides a more intuitive slope: on August 30, 2026, the net amount held by long-term holders over 30 days decreased by approximately 105,900 BTC, indicating a high movement speed at that time; while as of September 20, 2026, the same measure has only decreased by about 21,700 BTC, reflecting nearly a fivefold reduction in the net decrease within about three weeks. This means that, under the condition of still being in a net reduction phase, the clearance speed from the LTH supply side has dropped from the 100,000 level to the 20,000 level, and the selling pressure curve has shown clear attenuation.
For compliance and risk control teams, these changes on the supply side directly impact the quantitative assessment of concentrated selling pressure and liquidity risks. First, the continuous net decrease over five weeks suggests that older chips are still flowing out, which cannot be simply interpreted as long-term buying fully taking over; second, the reduction from about 105,900 to approximately 21,700 BTC over 30 days means that compared to the end of August, the new supply of potentially sellable chips has clearly narrowed, and under extreme scenarios, the assumption of “clearing the same batch of long-term chips” impacting market depth needs to have its weight adjusted downward. Combined with the premise in on-chain analysis that “the decline in LTH supply only indicates that relevant Bitcoins have moved, not necessarily corresponding to actual sales,” as well as the fact that tax rules typically regard asset disposal and actual gains and losses as taxable events rather than mere technical address movements, regulated ETFs and funds tend to view such indicators as signals of “relieved selling pressure but not yet zero,” rather than a simple risk elimination, thus reserving monitoring of further LTH reductions and scenario stress testing in their reports and risk limits.
How On-chain Selling Pressure Signals Enter Risk Control Dashboards
From the perspective of compliance and risk control teams, the data mentioned by CryptoQuant analyst Axel Adler Jr.—the LTH 30-day supply net decrease from approximately 105,900 BTC on August 30 to about 21,700 BTC as of September 20—will first be recorded as an input item for “long holder chip migration intensity” in market pressure, rather than being directly noted as “sell volume.” The dashboard will display such changes in on-chain supply alongside exchange net inflow and over-the-counter (OTC) settlement records: only when the decline in LTH supply is accompanied by a significant net inflow from exchanges or an increase in OTC settlements will it be marked as “suspected real selling pressure” in the liquidity and price impact module. Conversely, if a supply decrease is observed with stable net inflows from exchanges, it is more likely to be classified as “on-chain restructuring” or pledging, and not directly driving risk limit adjustments.
This processing logic is underpinned by the consensus of compliance frameworks and tax rules about “disposal”: tax assessment and compliance reporting focus on actual disposals that realize gains and losses, rather than pure technical movements between addresses. Therefore, in the absence of corroborating data, such as exchange inflow, most institutional models will impose constraints to prevent the automatic mapping of declining LTH supply to actual disposals and selling pressure, thus avoiding misreporting risk events in reports. For regulated funds and ETFs, such on-chain indicators are typically embedded into the “concentrated selling pressure and liquidity risk” monitoring module, and will only be elevated to compliance signals requiring disclosure or position adjustments when triggered by preset conditions along with both on-exchange and off-exchange trading data, which relies on the model maintaining a clear distinction between “on-chain movements” and “actual sales.”
Loss-making Chips Prompt Compliance Departments to Tighten Oversight
While LTH supply has continuously declined for five weeks, the LTH-SOPR index has slipped from 1.096 to 0.994, implying that the long-term chips that have recently transferred as a whole have shifted from slight profits to slight losses, with sellers in a theoretical “backward” position. By definition, an LTH-SOPR below 1 indicates that these Bitcoins, held for over 155 days, are in an average loss state at the current transaction or transfer price. Multiple on-chain analysis institutions have summarized that the range close to or below 1 for LTH-SOPR often corresponds to market bottoms or the end of panic selling; if there are still large amounts of chips moving at losses during this phase, it typically indicates “passive behavior” rather than “active cashing out.”
From a compliance perspective, large on-chain transfers at a loss are more likely to be associated with leverage risk control, margin calls, or liquidation processes, rather than simple long-term profit-taking. Institutional risk control, when interpreting this period's LTH-SOPR downward signal, needs to consider the account attributes and business scenarios of the sellers: large outflows concentrated in lending platforms, derivatives channels, or collateral wallets may indicate passive reduction of leveraged positions; whereas if loss-making chips are transferred between platforms multiple times in a short period, higher levels of review requirements will be triggered in anti-money laundering and unusual transaction modules. For regulated funds, custodians, and trading platforms, it is practically necessary to enhance the transparent identification of the sources and destinations of funds when monitoring large LTH transfers, ensuring that during phases of increased paper loss pressure, they can still clearly answer the core compliance question of “who is taking action at a loss, and where do the funds ultimately flow?” within KYC and anti-money laundering frameworks.
How ETFs and Taxation Interpret LTH Flows
For regulated ETFs and funds, shifts in LTH supply and LTH-SOPR have been viewed by risk control and disclosure teams as “on-chain versions of major shareholder reduction indicators.” When LTH holdings have declined continuously for five weeks since August 19, 2026, and the 30-day net decrease reached around 105,900 BTC on August 30, later dropping to approximately 21,700 BTC by September 20, compliance teams will annotate in liquidity and concentrated selling pressure risk chapters: indeed, long-term address chips are moving, but the speed of reduction has significantly slowed; combined with the LTH-SOPR dropping from 1.096 to 0.994 and recent prices surging to around $81,200, the chips that have moved remain overall in slight loss, which helps risk disclosure documents clarify that “not all on-chain movements represent high price cashing out,” but rather suggest that there may be structural handover occurring at a paper loss. When custodians face large on-chain outflows, they must internally correlate these outflows with ETF share changes and redemption flows, clearly disclosing their potential impact on product net value fluctuations and secondary market liquidity.
From a tax compliance perspective, the “movement” of on-chain LTH chips and “disposal” in tax law must be clearly distinguished. Tax rules typically classify asset disposals and actual realization of gains and losses as taxable events, rather than mere on-chain address movements; therefore, even if the LTH supply statistics show a net decrease of about 21,700 BTC over the past 30 days, as long as the corresponding portion remains internal to the custody system and has not been actually sold, the tax basis and realized gains of ETF and institutional accounts will not automatically change. For institutional investors, the key is to establish complete link records for each large LTH flow and position adjustment in compliance reports, audit files, and custody reconciliations—marking it as part of the on-chain recognized LTH reduction, while also noting whether it constitutes a taxable disposal for the current period on tax and financial levels, so that in the future during regulatory checks or tax audits, they can use the same set of data to explain the seemingly similar but legally distinct issues of “who is moving chips on-chain” and “who is realizing gains and losses on paper.”
Relieved Selling Pressure Does Not Mean Regulatory Risks Have Disappeared
From the data, the net decrease has narrowed from about 105,900 BTC on August 30 to around 21,700 BTC as of September 20, combined with LTH-SOPR dropping from 1.096 to 0.994 and the overall state of moving chips being slightly in loss, supported by historical experience, which indeed suggests that “the phase of concentrated selling pressure may be nearing its end, and panic sentiment is alleviating at the margins.” However, on the same timeline, the LTH holdings have continuously declined for five weeks since August 19, and a clear cumulative rebound has not yet appeared, and original analyses have already warned: the decline in LTH supply merely indicates chip movement, not necessarily completed disposal; currently, there is also a lack of public data indicating whether these chips are flowing significantly into exchanges or OTC settlements, meaning that both ETFs and regulated funds, as well as trading platforms’ proprietary and risk control teams, cannot simply conclude that the inflection point of selling pressure has been confirmed based solely on the slowdown in reduction speed, nor equate on-chain signals directly with “the end of selling pressure.” From a regulatory perspective, on-chain LTH indicators can only serve as input variables for market pressure and liquidity risk, while tax rules still rely on whether an actual disposal has occurred and whether gains and losses have been realized, thus compliance and risk control must dynamically adjust position limits, liquidity plans, and reporting disclosure thresholds based on ongoing tracking of LTH behavior and funding paths, linking “who is moving chips on-chain” with “who bears disposal responsibility legally,” and establishing risk boundaries on top of updatable on-chain data and compliance evidence chains, rather than a one-time judgment.
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