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Bitcoin’s circulating supply is tightening as investors increasingly choose to hold rather than sell, signaling strong market conviction amid rising profitability.
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Despite recent price dips due to geopolitical tensions, key metrics like the MVRV ratio and dormant coin accumulation indicate sustained long-term confidence among holders.
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According to COINOTAG, “The growing number of dormant coins and steady institutional inflows into spot Bitcoin ETFs underscore a market poised for the next bullish phase.”
Bitcoin supply tightens as investors hold through volatility, supported by strong institutional inflows and record dormant coin accumulation, signaling bullish momentum.
Investor Holding Patterns Strengthen Bitcoin Supply Dynamics
Recent data from Glassnode reveals a significant shift in Bitcoin’s supply dynamics, with investors demonstrating a pronounced reluctance to liquidate holdings despite favorable market conditions. The short-term cost basis around $98,300 has proven resilient even as prices briefly dipped to $99,000 amid geopolitical unrest. This steadfast holding behavior is a critical factor contributing to a supply squeeze, which analysts interpret as a bullish precursor for a rebound toward the $107,000 level once market stability returns.
Long-Term Conviction Evident in Dormant Coin Metrics
One of the most telling indicators of investor sentiment is the rise in dormant coins—Bitcoin units untouched for over 155 days—which recently reached a record 14.7 million BTC. The declining “liveliness” metric further confirms a trend toward long-term holding rather than active trading. This accumulation phase is particularly pronounced among wallets that acquired Bitcoin during the January breakout above $100,000, suggesting a cohort of investors with strong conviction and patience. Such behavior reduces circulating supply and can amplify upward price momentum when demand intensifies.
Institutional Inflows Bolster Market Liquidity and Demand
Institutional participation remains robust, with spot Bitcoin ETFs experiencing sustained capital inflows averaging $298 million over the past week. This influx of institutional capital, combined with stablecoin reserves holding steady near baseline levels, reflects a balanced ecosystem of liquidity and buying power. Analysts note a strategic rotation of stablecoin capital into major crypto assets, underscoring continued institutional engagement and confidence in Bitcoin’s long-term prospects.
Profit-Taking Remains Muted Despite Elevated Paper Gains
While the MVRV ratio indicates an average paper profit of 125%, realized gains have been comparatively low, averaging $872 million daily—significantly below earlier peaks this year. This muted profit-taking suggests that investors are prioritizing accumulation over liquidation, reinforcing the supply tightness narrative. Market watchers anticipate that unless a strong rally incentivizes selling, the current supply constraints will persist, setting the stage for the next phase of Bitcoin’s market cycle.
Conclusion
Bitcoin’s market dynamics are currently characterized by a tightening supply driven by long-term investor conviction and sustained institutional inflows. The combination of record dormant coin accumulation and steady ETF demand creates a foundation for potential price appreciation once external uncertainties subside. For investors and market participants, understanding these supply-side factors is crucial for anticipating Bitcoin’s trajectory in the coming months.
