Dormant Bitcoin awakens – Analyzing BTC cycle’s key liquidity test

Lengthy-dormant Bitcoin [BTC] provide is re-entering circulation at an unprecedented tempo on this cycle. Traditionally, the prior document occurred through the 2017-2018 bull market.

At the moment, roughly 900k to 1 million BTC held for over two years grew to become lively, valued at round $15–20 billion.

That distribution section elevated market liquidity and finally capped upside momentum, resulting in prolonged volatility and a cyclical high.

Nonetheless, the present cycle far exceeds these ranges. Since 2024, greater than 1.6 million dormant BTC have moved.

Supply: CryptoQuant

At costs close to $95,000-$100,000, this quantity equates to roughly $150-160 billion in worth.

Importantly, these actions aligned with value expansions fairly than drawdowns. Consequently, the market absorbed provide with out structural breakdowns.

Investor habits indicators calculated profit-taking, not promoting misery. Lengthy-term holders are distributing in power, reinforcing liquidity whereas sustaining bullish conviction.

ETF Outflows mirror a broader liquidity rebalancing cycle

ETF Outflows are rising as an lively liquidity catalyst fairly than a purely bearish sign.

CoinGlass data exhibits over $700 million exiting Bitcoin ETFs in a single session, matching the biggest withdrawal for the reason that twentieth of November 2025.

Traditionally, comparable outflow episodes in early 2024 and late 2025 coincided with short-term value compression.

Nonetheless, these phases didn’t set off structural breakdowns. As a substitute, they redirected liquidity sources.

Supply: CoinGlass

As ETF demand cooled, older cash started re-entering circulation. Lengthy-term holders equipped liquidity the place ETFs stepped again.

Consequently, dormant Bitcoin exercise elevated alongside ETF redemptions, suggesting rotation fairly than panic.

Traders adjusted their publicity fairly than exiting the market. This shift was mirrored in value consolidation lasting a number of weeks, adopted by renewed development continuation.

On the time of writing, ETF outflows aligned with revived lengthy‑time period provide, suggesting close to‑time period volatility might stay elevated. Nonetheless, if absorption continues, costs are prone to stabilize as soon as redistribution is full.

Are STHs absorbing the provision?

Brief-term holder provide has expanded in clear cycles over time, monitoring phases of value acceleration and redistribution.

In early bull markets, brief‑time period holder (STH) supply rose to five–6 million BTC as new demand absorbed circulating cash. Throughout stronger rallies, provide peaked at 7–8 million BTC, reflecting fast turnover in possession.

Extra just lately, STH provide has once more climbed towards the higher finish of that vary, reflecting renewed inflows.

Supply: CoinGlass

This progress didn’t happen in isolation. Cash launched from long-dormant holdings are fed immediately into STH accounts. As older holders bought their cash to make the most of market power, newer individuals absorbed the obtainable provide.

Consequently, market liquidity improved whereas volatility elevated. Sentiment shifted towards short-term buying and selling fairly than long-term conviction, resulting in consolidation phases after rallies.

Traditionally, comparable STH expansions adopted dormant releases throughout 2017 and liquidity-driven macro easing in 2020-2021.

If dormant coin releases persist, STH provide might proceed rising. That might probably maintain uneven value motion earlier than a clearer development resumes.

Remaining Ideas

• Bitcoin is seeing its largest liquidity rotation ever, as dormant cash and ETF outflows feed provide into value power fairly than distress-driven promoting.
• ETF redemptions are shifting liquidity to short-term holders, elevating volatility and signaling consolidation earlier than potential development continuation.