Long dormant Bitcoin [BTC] Supply is returning to circulation at an unprecedented pace in this cycle. Historically, the previous record occurred during the 2017-2018 bull market.
At that time, approximately 900,000 to 1 million BTC, held for more than two years, became active, worth approximately $15-20 billion.
That distribution phase increased market liquidity and ultimately limited upward momentum, leading to longer volatility and a cyclical top.
However, the current cycle far exceeds these levels. Since 2024, more than 1.6 million dormant BTC have been moved.
Source: CryptoQuant
At prices around $95,000-$100,000, this amount equates to a value of roughly $150-160 billion.
Importantly, these movements were in line with price increases rather than price decreases. As a result, the market absorbed the supply without structural disruptions.
Investor behavior indicates calculated profit taking and not sales problems. Long-term bondholders are dividing in strength, strengthening liquidity while maintaining optimism.
ETF outflows reflect a broader cycle of liquidity rebalancing
ETF Outflows emerge as an active liquidity catalyst rather than a purely bearish signal.
MintGlass facts shows more than $700 million of Bitcoin ETFs flowing out in a single session, marking the largest withdrawal since November 20, 2025.
Historically, similar outflow periods in early 2024 and late 2025 have coincided with short-term price compression.
However, these phases have not led to structural failures. Instead, they diverted liquidity sources.
Source: CoinGlass
As demand for ETFs declined, older coins came back into circulation. Long-term holders provided liquidity where ETFs took a step back.
As a result, dormant Bitcoin activity increased alongside ETF redemptions, signaling rotation rather than panic.
Investors adjusted their exposure rather than exiting the market. This shift was reflected in a price consolidation that lasted several weeks, followed by a renewed continuation of the trend.
At the time of writing, ETF outflows were in line with restored long-term supply, suggesting short-term volatility may remain elevated. However, if absorption continues, prices are likely to stabilize once redistribution is complete.
Do STHs absorb supply?
The supply of short-term holders has increased in distinct cycles over the years, following phases of price acceleration and redistribution.
In early bull markets, the short-term holder (STH) delivery rose to 5 to 6 million BTC as new demand absorbed the circulating coins. During stronger rallies, supply peaked at 7-8 million BTC, reflecting rapid ownership turnover.
More recently, STH supply has risen again to the high end of that range, reflecting renewed inflows.
Source: CoinGlass
This growth did not happen in isolation. Coins released from long-dormant assets are deposited directly into STH accounts. While older holders sold their coins to take advantage of market strength, newer participants absorbed the available supply.
As a result, market liquidity improved while volatility increased. Sentiment shifted to short-term trading rather than long-term conviction, leading to consolidation phases after rallies.
Historically, similar STH expansions followed dormant spending in 2017 and liquidity-driven macro easing in 2020-2021.
If the dormant coin release continues, STH supply may continue to rise. That would likely maintain choppy price action before a clearer trend resumes.
Final thoughts
- Bitcoin is experiencing its biggest liquidity rout ever as dormant coins and ETF outflows bolster supply rather than distress-driven selling.
- ETF redemptions shift liquidity to short-term holders, increasing volatility and signaling consolidation ahead of a possible continuation of the trend.