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The cryptocurrency market may be entering an era of volatility as dormant Bitcoin holdings become active again after a period of inactivity. Blockchain analytics company Glassnode shows that tens of thousands of Bitcoins that have been lying idle have started to move in recent weeks.
This reactivation boosts the circulating supply and might cause short-term selling pressure, often indicating reduced bullish momentum. Analysts mentioned that previous on-chain movements have sometimes signaled slower price growth as liquidity increased without matching demand.
Simultaneously, data from CryptoQuant showed that Bitcoin reserves on Binance have dropped to approximately 613,000 BTC, the lowest level since July.
The ongoing pullout suggests that investors are transferring their holdings to private wallets, which is a positive sign of increased confidence in the long-term outlook. Reduced exchange balances usually indicate a tightening of market supply, which can lead to increased sensitivity to demand-driven price surges.
While Bitcoin has been consolidating around the $112,500 level, traders have been moving their attention to altcoins. Market participants anticipate that the U.S. Federal Reserve will adjust its policy stance in the near future and may end quantitative tightening, providing liquidity again. A similar turnaround in 2020 triggered a major rally in alternative cryptocurrencies, like Ethereum. Analysts believe that another round of monetary easing could once again cause capital to move away from Bitcoin's dominance and into smaller-cap digital assets.
Technical indicators reflect this volatile attitude. Bitcoin's market share has been decreasing, signaling "altseasons" when liquidity shifts from Bitcoin to other tokens. Altcoin charts resemble historical accumulation phases, hinting at a potential upward movement if liquidity improves. However, experts warn that the market is sensitive to the outcomes of policy and investor sentiment.
Also Read: Bitcoin and Ethereum Hold Firm Ahead of Key US Inflation Data
Bitcoin is currently trading between $112,500 and $113,800, facing resistance around $115,000, which corresponds to the 50-day exponential moving average. Analysts warn that surpassing $115,000 might trigger major short liquidations worth about $4.8 billion, possibly pushing the price up to $116,000. Despite this, trading volume stays low, showing that many traders are waiting for clearer signs of strong demand before making strategic moves.
Recent data show a decrease of approximately 62,000 BTC in illiquid supply since the beginning of mid-October, indicating that long-term holders are selling into the market.
This move has raised concerns about a lasting price recovery, as fewer coins are being held tightly, resulting in increased potential selling pressure. Momentum traders have pulled back, and new buyers have failed to move in large numbers.
If institutional and retail inflows do not pick up, Bitcoin may continue to consolidate between $108,000 and $115,000. The broader market is split between concerns over increased supply and hopes for a policy-led increase in liquidity.
