Bitcoin Rally Fueled by Reallocation, Not New Capital
Key Takeaways
- Bitcoin (BTC) is approaching the US$113,000 mark, but momentum appears fragile.
- Long-term BTC holders are increasingly selling, while new investors are staying away.
- Important on-chain indicators such as Coin Days Destroyed (CDD) and Stock-to-Flow (S2F) point to potential weakness.
- A possible short squeeze between US$107,000 and US$113,000 could trigger short-term price spikes.
Rally Without Fresh Capital
The current Bitcoin price rally appears to be driven less by new investors and more by reallocations from existing holders. Data from the so-called UTXO Age Band shows that BTC coins held for six to twelve months are currently dominating market activity. At the same time, the share of new investors — those who have held BTC for less than a month — has dropped below 20%. For comparison, in previous market cycles, this figure was over 50%.
This trend suggests that the market is currently attracting little fresh capital. Instead, existing investors are rotating their positions, which could lead to reduced price momentum over the long term.
Coin Days Destroyed: Old Coins Becoming Active
Another indicator of the current market phase is the rise in Coin Days Destroyed (CDD). This value measures how many “days” of holding time are destroyed through transactions — in simple terms, when long-dormant coins are moved, the CDD value increases. Currently, it stands at 26.1 million, an increase of 2.09%.
Historically, a rising CDD often signals a distribution phase — a period in which experienced investors are taking profits. If this trend continues, it could build selling pressure that weighs on the BTC price.
Declining Scarcity: Stock-to-Flow Losing Relevance
The Stock-to-Flow (S2F) model, which measures the ratio of existing supply (stock) to annual production (flow), is a well-known tool for assessing Bitcoin’s scarcity. The current 20% drop in the S2F ratio suggests that BTC’s scarcity is decreasing — at least according to the model.
A lower S2F ratio often weakens confidence in long-term price gains, especially when demand from new market participants is also lacking.
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Fewer BTC on Exchanges: Lower Liquidity, Higher Volatility
BTC reserves on centralized exchanges have fallen by 1.83% to US$258.53 billion. This could mean two things: on one hand, the immediate supply for sale is shrinking, which could be positive for the price. On the other hand, market liquidity is decreasing — a risk in the event of sudden changes in demand.
Combined with the low activity from new investors, this increases the risk of significant price fluctuations.
Short Squeeze as a Short-Term Price Driver?
A look at the BTC/USDT liquidation map reveals a cluster of potential short positions between US$107,000 and US$113,000. If Bitcoin breaks through the US$107,000 level, this could trigger a so-called short squeeze — a wave of forced buying by short sellers who need to close their positions.
However, leverage on long positions remains moderate at present. This indicates that many market participants are acting cautiously. Without broader market participation, such a price surge may be short-lived.
Our Assessment
The current Bitcoin rally is driven less by new demand and more by internal rotation among existing investors. Indicators such as Coin Days Destroyed and a declining Stock-to-Flow ratio suggest the rally may be entering a mature phase. The drop in exchange reserves may provide short-term stability but also increases the risk of volatility.
A short-term price boost from a short squeeze is possible, but without fresh capital, the upside potential is likely limited. Those who are invested or looking to enter the market should closely monitor new investor activity and on-chain data.
Sources
- CryptoQuant
- CoinGlass
| Symbol | BTC |
| Coin type | Alt Coin |
| Transaction Speed | Slow |
| Pros |
|
| Cons |
|
| Further practical applications | |
| Price | 104217 |
| 24h % | 0.06 % |
| 7d % | -3.06 % |
| 30d % | 7.33 % |
| 60d % | 22.70 % |
| 1y % | 53.98 % |
| Market Cap | $2,071,094,095,833.00 |
| Max. Supply | 21,000,000.00 |
| Official Links | Website | Whitepaper | Source Code |
| Socials | Reddit | X | Message Board |
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