Bitcoin’s ‘True Top’ May Already Be In: Nadeau Warns of Déjà Vu From 2021 Cycle

Bitcoin long-term holders (LTHs) are now distributing BTC back into the market for the third time in the current cycle.

Their current behavior could define the trajectory of the ongoing cycle.

Repeat 2021-Style Cycle Top?

In the 2021 cycle, long-term holders began their main distribution phase between November 2020 and March 2021. In the process, this cohort of BTC holders trimmed their supply by 13.5% just before Bitcoin’s April 2021 peak, which Michael Nadeau, founder of The DeFi Report, argues was the “true” cycle top.

These coins were transferred to short-term holders (STHs) and introduced new liquidity into the market. However, LTHs soon re-accumulated, finishing the year with larger positions than they began with, which explains why the second top in November 2021 was relatively muted as it lacked the influx of new capital and was largely fueled by repositioning of existing holdings.

Interestingly, the same structure is unfolding in the present cycle according to the latest findings by Nadeau. LTHs reduced their supply by 12.4% into what may have been the first “true” top earlier this year (in the first quarter Q1 2025). Since then, the re-accumulation trend has returned, which is quite similar to the post-April 2021 phase.

Despite this, unlike in earlier cycles, the participation from short-term holders (STH) remains low, and there was minimal evidence of new money entering the market. Nadeau said that this muted demand could cap the strength of future rallies, echoing the two-top structure of 2021, where LTH behavior and time-driven holder transitions, rather than broad inflows, shaped late-cycle price action.

BTC Market Remains Vulnerable

Glassnode’s data also pointed in the same direction. The analytics platform found that despite modest signs of recovery, fragility lingers beneath the surface, which has left Bitcoin vulnerable if fresh demand fails to make a comeback.

While the spot market momentum is strong enough to push RSI into overbought territory, conviction looks shallow, owing to flat volumes and weakening CVD, suggesting sellers continue pressing into strength.

Futures markets reflected high activity, as evidenced by open interest and aggressive buy-side flows driving perpetual CVD higher, though softer funding highlighted reduced long demand and a more cautious outlook.

Options markets told a similar story: open interest climbed, but volatility spreads narrowed and skew dropped sharply, which means less hedging and greater complacency, thereby increasing the risk of sharp reactions if volatility resurfaces.

On-chain signals were mixed. BTC addresses trended toward cycle lows while transfer volumes rose, pointing to capital inflows without broader user growth. Fees declined, reflecting weak block space demand and muted speculative pressure. With profitability metrics improving, investors are broadly in profit, but increasing profit-taking hints at potential demand exhaustion.

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