Long and short-term Bitcoin (BTC) holders have continued engaging in strategic profit-taking following BTCs ascent to a new all-time high of $73,800. Bitfinex analysts believe BTC is likely to consolidate within a range, as long-term holders are offloading previously dormant supply.

According to the latest edition of the Bitfinex Alpha report, long-term holders reactivation of old BTC supply underscores the cyclical nature of the crypto market. It also reflects patterns of distribution and accumulation among investors.

Investors Engage in Strategic Profit-taking

Although the dormant BTC supply being sold is at a relatively smaller scale compared to previous bull market tops, the magnitude of realized profit recorded by long and short-term holders is close to the amount seen during the peak of the 2021 bull market.

When BTC touched $73,700 in March, around $2.6 billion in realized profits was taken via on-chain transactions, with 40% of the profit-taking linked to long-term Bitcoin holders, including investors who were redeeming their Grayscale Bitcoin Trust exchange-traded fund (ETF) shares. The rest of the realized profit was traced to the short-term holder cohort, amounting to roughly $1.56 billion.

The increase in realized profits in March not only reflects investor confidence but also contributes to the liquidity and volatility observed in the market, analysts said.

The aggressiveness of profit-taking by long-term holders could be seen in the Spent Output Profit Ratio (SOPR), which has hovered above one since November 2023 and has remained on an upward trajectory since the start of the year. The SOPR determines whether a coin is moved in profit or loss by comparing its current value against when it was last moved.

Bitfinex analysts said the strategic profit-taking by these investor cohorts has increased Bitcoins price volatility, hampering the assets efforts to move past its current range. At the time of writing, BTC had fallen to $65,500 after touching $70,000 the previous day.

Spot ETF Flows Remain Stable

Flows into the spot Bitcoin ETF market have remained stable, with demand double the amount mined at any given time. Last week saw positive net inflows for every trading day despite outflows from GBTC continuing at the same pace.

Bitfinex analysts said the ETF flows could significantly alter the inflationary nature of Bitcoin by buying the supply produced by miners daily. They also see a future where the only outflows witnessed would be from GBTC.