Long-dormant Bitcoin [BTC] supply is re-entering circulation at an unprecedented pace in this cycle. Historically, the prior record occurred during the 2017-2018 bull market.
At that time, roughly 900k to 1 million BTC held for over two years became active, valued at around $15–20 billion.
That distribution phase increased market liquidity and ultimately capped upside momentum, leading to extended volatility and a cyclical top.
However, the current cycle far exceeds those levels. Since 2024, more than 1.6 million dormant BTC have moved.
At prices near $95,000-$100,000, this amount equates to roughly $150-160 billion in value.
Importantly, these movements aligned with price expansions rather than drawdowns. As a result, the market absorbed supply without structural breakdowns.
Investor behavior signals calculated profit-taking, not selling distress. Long-term holders are distributing in strength, reinforcing liquidity while maintaining bullish conviction.
ETF Outflows reflect a broader liquidity rebalancing cycle
ETF Outflows are emerging as an active liquidity catalyst rather than a purely bearish signal.
CoinGlass data shows over $700 million exiting Bitcoin ETFs in a single session, matching the largest withdrawal since the 20th of November 2025.
Historically, similar outflow episodes in early 2024 and late 2025 coincided with short-term price compression.
However, those phases did not trigger structural breakdowns. Instead, they redirected liquidity sources.
As ETF demand cooled, older coins began re-entering circulation. Long-term holders supplied liquidity where ETFs stepped back.
Consequently, dormant Bitcoin activity increased alongside ETF redemptions, suggesting rotation rather than panic.
Investors adjusted their exposure rather than exiting the market. This shift was reflected in price consolidation lasting several weeks, followed by renewed trend continuation.
At the time of writing, ETF outflows aligned with revived long‐term supply, suggesting near‐term volatility may remain elevated. However, if absorption continues, prices are likely to stabilize once redistribution is complete.
Are STHs absorbing the supply?
Short-term holder supply has expanded in clear cycles over the years, tracking phases of price acceleration and redistribution.
In early bull markets, short‐term holder (STH) supply rose to 5–6 million BTC as new demand absorbed circulating coins. During stronger rallies, supply peaked at 7–8 million BTC, reflecting rapid turnover in ownership.
More recently, STH supply has again climbed toward the upper end of that range, reflecting renewed inflows.
This growth did not occur in isolation. Coins released from long-dormant holdings are fed directly into STH accounts. As older holders sold their coins to take advantage of market strength, newer participants absorbed the available supply.
Consequently, market liquidity improved while volatility increased. Sentiment shifted toward short-term trading rather than long-term conviction, leading to consolidation phases after rallies.
Historically, similar STH expansions followed dormant releases during 2017 and liquidity-driven macro easing in 2020-2021.
If dormant coin releases persist, STH supply may continue rising. That would likely sustain choppy price action before a clearer trend resumes.
Final Thoughts
- Bitcoin is seeing its largest liquidity rotation ever, as dormant coins and ETF outflows feed supply into price strength rather than distress-driven selling.
- ETF redemptions are shifting liquidity to short-term holders, raising volatility and signaling consolidation before potential trend continuation.
