The cryptocurrency market has shifted from a period of exuberance to one of cooling sentiment, marked by shrinking liquidity and changing investor risk appetite. After three consecutive months of decline, Bitcoin and Ethereum are showing critical on-chain signals that could hint at an upcoming market inflection. While short-term pressure persists, deeper metrics suggest accumulation may be underway. This article analyzes key blockchain data, exchange flows, and market dynamics to assess whether we're witnessing a bearish continuation or the early stages of a new bullish phase.
Market Liquidity Tightens Amid Declining On-Chain Activity
Recent data from Glassnode reveals a notable drop in Bitcoin’s on-chain activity — reaching levels not seen in months. Transaction volumes have declined significantly, often a precursor to market consolidation following periods of high volatility.
One telling metric is Bitcoin’s Hot Supply, which measures the volume of BTC transferred within the past seven days. Over the last three months, this figure has plummeted from 5.9% to just 2.8%, representing a more than 50% decrease. This sharp drop signals that fewer coins are changing hands frequently, indicating reduced speculative trading and tightening liquidity.
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A shrinking hot supply typically aligns with a transition from speculation to accumulation. When long-term holders (HODLers) refrain from selling and new capital inflows slow, the market often enters a consolidation phase — a potential precursor to the next upward move.
Additionally, Bitcoin miners’ share of on-chain transaction volume has dropped to 4.23%, the lowest since November 2022. This suggests miners are reducing their selling activity, possibly holding BTC in anticipation of future price recovery. Reduced miner sell pressure alleviates downward forces on price, especially during downturns.
Moreover, the decline in miner transactions may reflect strategic shifts — such as optimizing operational efficiency or focusing on staking alternatives — rather than mere market disengagement. As miner activity wanes, other participants like institutional investors and long-term holders are increasingly shaping on-chain behavior.
In the derivatives market, total futures open interest has fallen from an all-time high of $57 billion to $37 billion — a drop of roughly 35%. This contraction reflects waning leverage and speculative positioning, further confirming a retreat from high-risk strategies.
The launch of spot Bitcoin ETFs in 2024 initially fueled arbitrage trades (long ETF, short futures), driving inflows during bullish momentum. However, as market confidence weakened, these strategies unwound, leading to ETF outflows and adding downward pressure on spot prices.
Ethereum Exchange Supply Hits 10-Year Low
According to analytics firm Santiment, the amount of ETH available on exchanges has dropped to just 8.97 million tokens — worth approximately $17.8 billion and representing less than 7.5% of Ethereum’s current market cap. This is the lowest level in nearly a decade, surpassing even the previous low set in November 2015.
Just seven weeks ago, exchange-held ETH was 16.4% higher, highlighting a rapid shift of supply off centralized platforms and into DeFi protocols, staking contracts, and private wallets.
This structural shift reduces immediate sell-side pressure, as fewer coins are readily available for dumping. However, it also means the remaining supply is more sensitive to large trades, potentially increasing short-term volatility.
Despite tighter supply, Ethereum’s price continues to face headwinds due to broader macro uncertainty, declining risk appetite, and outflows from institutional players.
IntoTheBlock data shows that Ethereum’s MVRV (Market Value to Realized Value) ratio has dipped to around 0.8 — a level historically associated with bear market conditions. The MVRV ratio compares the current market value of ETH with its realized value (average acquisition cost), helping identify undervaluation or overvaluation.
An MVRV below 1.0 suggests that, on average, holders are underwater — often a sign of capitulation or bottoming behavior. While not a perfect timing tool, such readings have preceded major market reversals in past cycles.
Are Whales Accumulating? Signs Point to Yes
Despite ongoing price declines, there are emerging signs of accumulation among large holders — commonly referred to as "whales."
Data from IntoTheBlock indicates that while Bitcoin whale balances had been gradually declining over the past year, March 2025 saw a reversal: whales added approximately 62,000 BTC to their holdings. This accumulation by informed players could signal confidence in a future price rebound.
Historically, whale accumulation during downturns has often preceded major rallies. These investors typically have better access to information and infrastructure, making their behavior a valuable leading indicator.
Additionally, U.S. Federal Reserve signals pointing toward potential monetary easing have sparked renewed optimism. Although quantitative tightening officially ended in April 2025, many analysts believe true bull momentum will require either a reinstatement of the Supplemental Leverage Ratio (SLR) exemption or the launch of new quantitative easing (QE) programs.
Arthur Hayes, co-founder of BitMEX, recently suggested that $77,000 could be Bitcoin’s floor, contingent on macro developments and equity market performance influencing Fed policy decisions.
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Frequently Asked Questions (FAQ)
Is Bitcoin still in a bull market?
While Bitcoin experienced a strong bull run earlier in 2024, recent corrections and declining momentum suggest the market has entered a consolidation or correction phase. Whether the bull cycle resumes depends on macro conditions, liquidity shifts, and institutional participation.
What does low exchange supply mean for Ethereum?
A low exchange supply means fewer ETH tokens are available for immediate sale, reducing selling pressure. This often supports price stability or upside potential once demand increases — a bullish structural development even during price dips.
What is MVRV and why does it matter?
MVRV (Market Value to Realized Value) compares an asset’s current market price with the average cost basis of all existing coins. A ratio below 1.0 indicates that holders are collectively losing money — commonly seen at cycle lows and viewed as a potential buying opportunity.
Are miners selling less Bitcoin?
Yes. Miners’ share of on-chain transaction volume has hit its lowest point since late 2022, suggesting reduced selling activity. This can alleviate downward price pressure and indicate confidence in future valuations.
What role do spot ETFs play in current price action?
Spot Bitcoin ETFs initially drove inflows through arbitrage strategies during rising markets. As sentiment cooled, these trades reversed — contributing to outflows and downward pressure. Their impact remains significant but cyclical.
Could we see a bullish reversal soon?
Several indicators — including whale accumulation, declining miner sell pressure, and tightening supply — suggest the foundation for a reversal may be forming. However, confirmation will require sustained buying volume and improving macro conditions.
Final Outlook: Consolidation Before the Next Move
The crypto market is currently navigating a transition from high-risk speculation to cautious accumulation. While short-term sentiment remains subdued due to ETF outflows and weak derivatives activity, underlying fundamentals show resilience.
Key signs — such as declining hot supply, falling exchange balances for both BTC and ETH, and renewed whale accumulation — align with historical patterns seen before major market turns.
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With macro tailwinds potentially emerging from Fed policy shifts, the second half of 2025 could set the stage for renewed momentum — especially if quantitative easing returns or financial stress triggers capital rotation into hard assets like Bitcoin.
For now, patience and vigilance are key. Watch for sustained increases in exchange inflows, rising open interest with price support, and continued whale accumulation as early signals of the next bull leg.
Core Keywords: Bitcoin bull reversal, Ethereum exchange supply, on-chain analysis, Bitcoin whale accumulation, MVRV ratio, crypto market liquidity, miner sell pressure