Why won't the BTC diamond hand sell-off repeat the events of 2017 and 2021? The market fundamentals are already different.

The market is experiencing a new wave of volatility. Bitcoin prices have fallen back from the mid-January high near $97,000, erasing most of the gains since 2026.

Meanwhile, some early holders (the so-called “diamond hands”) are beginning to take action. A notable event is: a Bitcoin whale wallet that had been dormant for 12 years (referred to as “5K BTC OG”) has started selling its holdings in batches. This wallet accumulated approximately 5,000 BTC at around $332 in 2012 and has now sold 2,500 BTC, with an average sale price of about $106,164, locking in profits of over $50 million.

This has raised concerns among many investors: Will the concentrated selling by early holders repeat the history of late 2017 or late 2021, triggering cyclical market crashes?

01 Market Pulse: Diamond Hands Actions and the Nature of the Current Sell-Off

Recent market turbulence is evident. As of January 23, the latest data on Gate shows Bitcoin at $89,699.57. This decline was accompanied by massive market liquidations, with over $1.5 billion in leveraged long positions liquidated in the past 48 hours.

Meanwhile, on-chain data captured actions by early holders. Besides the aforementioned “5K BTC OG,” another observation is that over $40 billion worth of Bitcoin transferred from whale wallets to spot exchanges on January 20, which is often seen as a potential precursor to selling.

However, simply comparing the current situation to historical peaks may overlook fundamental differences.

The current sell-off is more driven by external macro shocks rather than internal bubble bursts. Major triggers include geopolitical tensions and what is called “Japanic,” a global liquidity tightening.

02 Mirror of History: Key Differences Between 2017, 2021, and 2026

To determine whether history is repeating, we need to compare the core differences in market structure, participants, and selling dynamics across these three periods. The table below clearly illustrates this evolution:

From the above table, it is clear that the underlying market structure has undergone fundamental changes. In earlier cycles, the market was mainly driven by retail sentiment and simple leverage, with collapses being endogenous. Currently, selling pressure is more driven by external macro pressures linked to Bitcoin’s connection with traditional financial systems.

03 New Image of Diamond Hands: From Faith-Based Holding to Strategic Management

The meaning of “diamond hands” itself is evolving. In the past, it almost equated to the belief of “never selling.” Today, it more often describes a strategic asset management approach under a long-term conviction.

Taking “5K BTC OG” as an example, its selling behavior shows a clear strategic pattern:

• Batch and orderly: Over the past five months, at least 10 transactions transferring 250 to 500 BTC each, rather than panic dumping all at once.
• Retaining core holdings: After selling 2,500 BTC, the wallet still holds about 2,500 BTC worth approximately $237.5 million, indicating it is not bearish and exiting, but rather taking partial profits to meet financial goals.

This behavior differs fundamentally from the cost-agnostic, full liquidation sell-offs at the end of 2017 or 2021 cycles. It reflects that long-term holders are becoming more mature and rational; their actions are no longer signals of market top but part of normal, healthy capital rotation within the market lifecycle.

04 Macro Narrative Shift: From “Digital Gold” to Independent Asset

Bitcoin’s macro narrative is undergoing a critical “stress test.” Previously, Bitcoin was often called “digital gold,” viewed as a safe haven during geopolitical turmoil.

However, recently, amid soaring gold prices, Bitcoin has declined, prompting a reassessment of its positioning. Analysis shows that Bitcoin’s actual correlation with gold is very low at 0.14, and with bonds even lower at 0.06.

This indicates that Bitcoin is breaking away from the traditional safe-haven asset framework, with its price logic becoming more independent. The current decline is partly due to it being temporarily viewed as a high-beta risk asset at the trading level, affected when funds withdraw from all risk sectors amid global “risk-off” sentiment.

This temporary synchronized decline actually highlights Bitcoin’s long-term value as a non-sovereign, low-correlation asset. When traditional assets fluctuate due to sovereign credit or policy issues, Bitcoin’s unique attributes may be re-priced.

05 Future Outlook and Strategies: Identifying Opportunities Amid Volatility

Overall, the cyclical tragedies triggered by internal market euphoria and leverage crashes in 2017 and 2021 are less likely to recur.

The current volatility reflects a more mature, complex market closely linked to the global financial system, reacting to external shocks. The sell-off by early holders is strategic rebalancing, not a collapse of conviction. The “smart money” is shifting from risky high-leverage perpetual contracts to more sophisticated risk management tools like options.

For investors, this means:

1. Focus on macro factors: Bitcoin’s price increasingly correlates with global liquidity and geopolitics, requiring inclusion in macro analysis frameworks.
2. Use fear indicators: When market sentiment metrics like the “Fear and Greed Index” hit extreme lows, it often signals medium-term opportunities. Currently, the index is in “extreme fear.”
3. Examine on-chain data: Pay attention to long-term holders’ movements, but distinguish between orderly reduction and panic transfers.

Future Outlook

While market participants are anxious about whether Bitcoin can hold the key psychological level of $90,000, on-chain data shows that after the price fell below this level, some whales began buying about 450 BTC daily, and three large wallets accumulated a total of 3,000 BTC within 24 hours.

Every profit-taking by early holders may be viewed as a buying opportunity by another group of investors recognizing long-term value. This quiet handover of capital between old and new investors, rather than a one-way collapse, may be a silent declaration of the market’s true maturity.