Bitcoin Market Update

Bitcoin reached a new all-time high of $109,114 on January 20. However, it has faced persistent sell pressure, dropping about 20% from the peak. Recent weeks show weak demand, fading accumulation, and rising fear among short-term investors.

At Outset PR, we note that such corrections are common in Bitcoin’s historical cycles, often due to shifts in liquidity, derivatives market positioning, and investor sentiment. This article explores current Bitcoin liquidity trends, derivatives market activity, and holder behaviors to assess whether the original cryptocurrency has peaked or is experiencing a temporary correction.

Table of Contents

• From Distribution to Potential Accumulation
• Contracting Liquidity Limits Bitcoin’s Upside
• UTXO Age Data Reveals Strong Holder Conviction
• ETF Flows and Market Impact
• Closing Thoughts

From Distribution to Potential Accumulation

Bitcoin’s market cycles are characterized by phases of accumulation and distribution. A distribution phase was evident in late February 2025, with recent movements in the Accumulation/Distribution (A/D) Indicator showing strong accumulation followed by significant selling pressure.

The indicator is now rebounding after a low in mid-March, suggesting that accumulation is resuming. Historically, such rebounds often lead to price stabilization or recovery. However, whether this signifies a sustained accumulation phase or a temporary bounce remains uncertain.

Further confirming this trend, spot trading volumes on centralized exchanges dropped by 19.9%, and derivatives trading volumes declined by 20.9%, according to February 2025 CoinDesk Data’s Exchange Review. Additionally, open interest on derivatives exchanges fell by 29.8%, marking the lowest since November 2024.

The situation intensified after the Bybit hack, resulting in a $1.4 billion loss, amplifying sell pressure and deterring accumulation as liquidity concerns grew.

Contracting Liquidity Limits Bitcoin’s Upside

Liquidity contraction during corrections is a significant factor impeding Bitcoin’s ability to reach new highs. Glassnode data indicates that net capital inflows into Bitcoin have stalled, with Realized Cap growing at just 0.67% monthly. This stagnation indicates a lack of new capital inflow, hindering price increases.

Additionally, Hot Supply, a vital indicator of active trading liquidity, has fallen from 5.9% to 2.8%, over a 50% decline. Exchange inflows also dropped by 54%, demonstrating diminished trading activity and weakened demand-side pressure.

On the derivatives front, open interest in Bitcoin futures plummeted from $57 billion at ATH to $37 billion (-35%), reflecting reduced speculative interest and hedging activity.

Data from Glassnode shows that the 30-day rolling sum of short-term holder losses has reached $7 billion, marking the largest extended loss-taking event of the cycle, though not as severe as the May 2021 crash or the 2022 bear market.

UTXO Age Data Reveals Strong Holder Conviction

CryptoQuant’s Realized Cap – UTXO Age Bands tracks the USD value of coins by age since last moved, revealing a significant portion of Bitcoin’s realized cap is held by long-term investors.

Breakdown of Realized Cap by Age Cohorts as of March 23, 2025:

• 0–1 day: $5.1 billion
• 1 day–1 week: $26.1 billion
• 1 week–1 month: $80.7 billion
• 1–3 months: $146.5 billion
• 3–6 months: $264.2 billion
• 6–12 months: $96.5 billion
• 12–18 months: $61.9 billion
• 18 months–2 years: $22.2 billion
• 2–3 years: $34.6 billion
• 3–5 years: $111.4 billion
• 5–7 years: $8.5 billion
• 7–10 years: $7.9 billion
• Over 10 years: $303.4 billion

With under a week’s UTXOs totaling $31.2 billion, accounting for just 2.7% of the total realized cap, it indicates that short-term trading is not driving the market. The low proportion of newly moved coins suggests most recent buyers are holding their positions, showing resilience despite short-term pressures.

Interestingly, the 3–6 month cohort holds the largest share of Bitcoin’s realized cap at $264.2 billion, remaining stable through recent price swings, underscoring long-term confidence in the market.

Long-Term Holding Dynamics

Notably, Bitcoin held over ten years, representing $303.4 billion, marks the largest realized value across all age bands. This UTXO age distribution aligns with a bullish accumulation narrative, indicating long-term holders’ confidence and subdued speculative flipping, which historically prepares grounds for strong price recoveries.

ETF Flows and Market Impact

Recent ETF data from March 5-21, 2025, presents mixed signals, with some ETFs showing strong inflows while others face noticeable outflows. This suggests that while Bitcoin’s price remains under pressure, long-term institutional interest supports market sentiment.

ETF Inflows:

• IBIT (BlackRock’s Bitcoin ETF): 39,774 BTC inflow
• FBTC (Fidelity’s Bitcoin ETF): 11,392 BTC inflow
• ARKB (Ark Invest’s Bitcoin ETF): 2,021 BTC inflow
• BTCO (Invesco’s Bitcoin ETF): 2,678 BTC inflow
• GBTC (Grayscale’s Bitcoin Trust): 22,526 BTC outflow

Overall, Bitcoin ETFs collectively saw a 36,138 BTC net inflow, indicating sustained institutional demand despite volatility.

Closing Thoughts

Bitcoin is currently navigating a complex post-ATH environment, exhibiting both short-term headwinds and long-term strength. Liquidity contraction is evident in both spot and derivatives markets as capital inflows slow and speculative activities wane. Nevertheless, accumulation is rebounding, UTXO age data supports strong long-term holder conviction, and institutional flows keep favoring Bitcoin. While price pressures persist, these dynamics suggest the current phase may signify healthy consolidation rather than the end of the current bull cycle.

Disclosure: This article does not represent investment advice. The content is for educational purposes only.