Following its peak over a week ago, Bitcoin has entered a consolidation phase. Analysts from the Bitfinex crypto exchange report that while Bitcoin’s structural integrity remains strong, the bullish market is transitioning into a more sensitive and reactive stage.
The latest Bitfinex Alpha report indicates a natural shift occurring among Bitcoin holder groups. This capital movement suggests a maturing market cycle, yet Bitcoin faces potential short-term vulnerability, particularly if demand declines.
**Bitcoin’s Short-term Vulnerability**
For the first time since early 2024, long-term Bitcoin holders are starting to sell off and secure profits. These investors are transferring more Bitcoin to exchanges and new wallets. As these assets are sold, newer market players such as exchange-traded funds (ETFs), institutional investors, and retail buyers step in to absorb the supply.
Bitfinex highlights that ETFs and Bitcoin treasury companies represent a substantial portion of these purchases. This shift from long-term to short-term holders is typical in every bullish cycle. However, the future of Bitcoin, whether it enters a cooling phase or sees another spike, depends on the strength of spot demand.
Currently, on-chain data indicates that most of the Bitcoin supply is now in profit, with the spot price exceeding the 95th percentile threshold, signaling a sharp rise in investors with unrealized profits. Such conditions often lead to high profit-taking by short-term holders and opportunistic investors.
This results in the redistribution of supply to new investors at elevated prices, possibly sparking a brief Bitcoin uptrend but also weakening market structure and increasing the cost basis. Bitfinex warns that sharp price decreases could result in broader market downturns, heightening the risk of volatility and corrective phases, especially if buying momentum wanes.
**Altcoins Experience a Surge**
As Bitcoin’s momentum slows, altcoins are experiencing what analysts describe as a “vigorous catch-up rally.” Investors are reallocating funds from Bitcoin to major altcoins, seeking further gains.
For the first time since November 2024, many prominent altcoins are outperforming Bitcoin, with Ethereum (ETH) and Solana (SOL) leading the way. The Others Index, which measures the performance of cryptocurrencies excluding stablecoins and the top 10 by market cap, has soared by at least 35% in two weeks, adding nearly $85 billion.
Moreover, Bitcoin’s market dominance has dropped by 6.9%, marking seven consecutive daily declines for the first time since December 2023.
