Bitcoin recently failed to overcome the $97,000 resistance following its price surge seen in mid-January. At the moment, the leading cryptocurrency has taken on a state of inertia, with no significant movement in either direction seen. However, an investigation of on-chain dynamics has recently revealed that trouble might be looming for the flagship cryptocurrency.

Sudden Inflows: Caution Or Opportunity?

In a QuickTake post on CryptoQuant, key opinion leader CryptoZeno shares a potentially foreboding observation on Bitcoin’s market dynamics, saying the premier cryptocurrency could be facing a risk of distribution in the near-term.

This conjecture is based on the Bitcoin: Exchange Inflow (Total) – All Exchanges metric, which serves the basic function of tracking the total amount of BTC transferred into centralized exchanges over a certain period.  CryptoZeno highlights in the post that exchange inflows have seen sharp surges through Bitcoin’s most-recent trading sessions, which represent one of the most significant spikes seen in the month of January.

Typically, large inflows of BTC into exchanges act as a telltale sign that investors are preparing to distribute their holdings. This is contrary to any inclination towards long-term holding. Interestingly, the sign of distribution-readiness is more typical if the event were to occur just after a strong advance of the BTC price. 

Also citing historical occurrences, CryptoZeno explains that such behavior, where BTC holders increasingly send their tokens to exchanges, suggests that investors are venturing out of Bitcoin and to more “liquid venues.” Expectedly, such a massive dispersal of their holdings would translate into price as increased sell-side pressure, especially in the short-term. 

Notably, the analyst makes it clear that inflows alone do not tell a sure story of an immediate reversal. More accurately, spikes in exchange inflows often come before heightened volatility periods or corrective price action.

Analyst Highlights Mid- To Large-Size Bands As Main BTC ‘Movers’

CryptoZeno provides more context by merging the Spent Output Value Bands with the Exchange Inflow metric. This shows which investor cohort was more involved in creating the distribution signal seen. On inspection of the blended metric, it becomes apparent that the spike in exchange inflows was largely induced by mid-to-large size bands (10-100 BTC, and 100-1,000BTC).

These size bands, according to the crypto expert, are associated with whales, long-term investors who are repositioning, or even ETFs. These investor classes do not merely act without strategic reasons. As a result, their activity is usually more important compared to retail activity.

A simultaneous increment to exchange inflows, alongside large investor distribution, is another sign that the Bitcoin market is on the brink of a fragile phase. In the event that inflows remain high as price struggles to reclaim past highs, the world’s leading cryptocurrency could be entering a phase of trouble, as it would suggest the predominance of supply over demand.

As of this writing, Bitcoin is worth $95,250, recording almost no growth since the past day.

On-chain data shows Bitcoin short-term holders have transferred a large amount of tokens to exchanges alongside the asset’s recovery rally.

Bitcoin Short-Term Holders Have Made Profit Transactions To Exchanges

In a new post on X, CryptoQuant community analyst Maartunn has talked about the latest trend in the exchange deposit transactions of Bitcoin short-term holders (STHs).

STHs include the BTC investors who purchased their coins within the past 155 days. They make up for one of the two main sides of the network divided on the basis of holding time, with the other side being known as long-term holders (LTHs).

Historically, the STH cohort has proven to represent the weak hands of the market, who easily react to market volatility. In contrast, LTHs include the diamond hands of the sector.

Bitcoin has witnessed a recovery rally recently, so, considering the track record of STHs, some selling from them is likely to have occurred. One way to track distribution from the group is through its exchange inflow data.

Below is the chart shared by Maartunn that shows the exchange deposit transactions that Bitcoin STHs have made over the last couple of months.

In the graph, the STH exchange inflows are shown separately for profit and loss transactions, based on whether holders held an unrealized gain or loss before sending the tokens to exchanges.

From the chart, it’s apparent that the 24-hour sum of the STH exchange deposit transactions in profit has shot up as the cryptocurrency has gone through its rally, reaching a high of 41,800 BTC. Meanwhile, loss exchange inflows have shrunken, falling to a low of 1,800 BTC. Thus, it would appear that selling focus from STHs has largely shifted to profit-taking.

Though, while some STHs may be harvesting profits, the cohort has a whole is still in a state of net unrealized loss as Bitcoin is trading below the STH Realized Profit, as highlighted by the analyst in another X post.

The “Realized Price” is an on-chain metric that measures the average cost basis of Bitcoin investors or addresses as a whole. The STH version specifically tracks the break-even level of the supply purchased within the past 155 days.

As displayed in the above chart, the Bitcoin spot price plummeted under the STH Realized Price during the drawdown of Q4 2025. Since then, it has remained under the line, although the latest rally has brought it close. Currently, the indicator’s value is situated at $99,412.

BTC Price

Bitcoin has gone down since its high above $97,000 earlier in the week as its price is now trading around $94,600.