Bitcoin whales, defined as holders with large Bitcoin balances (often over 1,000 BTC), have been actively involved in significant selling and buying activities throughout 2025, and their behavior is closely watched as a potential indicator of market trends. However, the question of whether these whales are preparing for tax season sell-offs is nuanced and involves multiple factors beyond just whale activity.
Recent analysis shows that the Bitcoin market experienced a notable sell-off in the fourth quarter of 2025, which some initially attributed to whale selling. However, major asset managers like Fidelity have clarified that the primary driver behind the Q4 Bitcoin weakness was not whale sell-offs alone but rather year-end tax considerations and a rotation of capital into other investment alternatives. According to Chris Kuiper, VP of Research at Fidelity Digital Assets, long-term holders are making year-end tax and positional adjustments, cashing in gains to optimize their tax positions before the fiscal year closes. This tax-driven selling pressure is compounded by liquidity stress in the broader financial system, including effects from the U.S. government shutdown, which tightened liquidity and increased selling pressure on Bitcoin, especially from U.S.-based investors[1][2].
On-chain data supports the observation that long-term holders across various holding periods—from six months to several years—have been taking profits simultaneously, which aligns with typical year-end tax optimization behavior. This widespread profit-taking is not limited to a few large whales but is a broader market phenomenon. The Coinbase Premium Index, which measures the price difference between U.S. and international exchanges, has been negative, indicating that American investors are selling more aggressively, likely to meet tax obligations and rebalance portfolios[2].
Despite this selling pressure, whale activity in 2025 has been complex. While some whales have been offloading Bitcoin steadily—such as the Winklevoss twins, who have liquidated over 9,000 BTC since early 2025—others have been accumulating. In fact, there have been significant whale accumulation waves, including the second-largest weekly accumulation of the year, where large holders absorbed selling from smaller investors. This suggests that while some whales are selling to meet tax or liquidity needs, others see value and are increasing their holdings, reflecting confidence in Bitcoin’s long-term prospects[3][4].
The dynamic between whale selling and institutional buying is critical. In late 2024 and early 2025, a cohort of whales holding between 10 and 1,000 BTC drove a rally by accumulating large amounts of Bitcoin. However, in November 2025, this same group began net selling, distributing around 5,760 BTC, which historically signals bearish market conditions. This selling coincided with a reduction in institutional buying, particularly from spot Bitcoin ETFs, which had previously absorbed much of the whale distribution. When ETF inflows turned negative, the diminished demand met with increased whale selling, contributing to price declines below key support levels like $95,900[5].
The overall picture indicates that Bitcoin whales are indeed adjusting their positions ahead of tax season, contributing to sell-offs, but they are not the sole cause of market weakness. Tax-driven profit-taking by a broad base of long-term holders, liquidity constraints in the financial system, and shifts in institutional demand all interplay to influence Bitcoin’s price movements. Whales are both sellers and buyers in this environment, with some liquidating to meet tax and liquidity needs, while others accumulate during periods of market capitulation.
In summary, Bitcoin whales are part of a larger ecosystem of market participants responding to tax season pressures, liquidity stress, and changing market dynamics. Their selling activity contributes to seasonal sell-offs, but it is intertwined with broader tax optimization strategies and institutional flows rather than being an isolated phenomenon.