Bitcoin speculators are seizing the opportunity to lock in profits as BTC hits a three-month high, nearing $74,000. On-chain data shows that short-term holders (STHs) are leading the charge, sending large amounts of Bitcoin to exchanges for profit-taking.

Short-Term Holders Rush to Secure Gains

Data from analytics platform Glassnode reveals that Bitcoin holders who have owned BTC for 155 days or less are actively selling at current prices. As of October 14, 7,127 BTC, valued at roughly $480 million, was sent to Binance by STHs— the highest inflow since Bitcoin’s all-time high of $73,800 in March. This trend signals an aggressive profit-taking move as traders look to protect their gains.

Bitcoin STH transfer volume to Binance. Source: Glassnode

Exchanges See Record Inflows

Binance isn’t the only exchange seeing significant inflows. According to Glassnode, the overall number of BTC being sent to major exchanges has surged, with daily totals this week among the highest since early June. These inflows suggest that STHs are capitalizing on the price increase after months of sideways market performance.

Positive Shift in Market Sentiment

STHs’ profit-taking comes as their Profit/Loss Ratio hits 1.2, breaking one standard deviation above its 90-day mean. This metric, as highlighted by Glassnode, indicates a potential shift in investor sentiment, with many traders feeling satisfied after months of stagnation. The profit dominance suggests that STHs are still in the green, even as the market navigates heightened volatility.

Bitcoin STH profit/loss ratio data. Source: Glassnode/X

Supply Squeeze Points to Future Volatility

While demand for Bitcoin has slowed since the all-time high in March, supply availability is also tightening. Glassnode noted a growing divergence between supply and demand forces, which historically precedes periods of significant market volatility. This compression of active supply, coupled with rising demand, could lead to further price fluctuations in the coming weeks.

With Bitcoin whales holding 1.5 million BTC and short-term holders cashing out, the market is poised for a potential shift in the weeks ahead.

Bitcoin exchange-traded funds (ETFs) in the United States saw a resurgence on 11th October, with $253.6 million in net inflows. This marked a significant break from three consecutive days of outflows, restoring confidence in the market.

Fidelity Leads Inflows

Fidelity’s Wise Origin Bitcoin Fund led the surge, attracting $117.1 million in net inflows, according to Farside Investors data. ARK 21Shares Bitcoin ETF followed closely, pulling in $97.6 million, while Bitwise’s Bitcoin ETF secured $38.8 million—its largest inflow in 11 trading days. Invesco Galaxy and VanEck Bitcoin ETFs also saw positive movement, contributing to the overall net inflows.

BlackRock and Grayscale Show Mixed Results

BlackRock’s iShares Bitcoin Trust (IBIT) recorded zero inflows on the day, as did ETFs issued by Franklin Templeton, Valkyrie, and WisdomTree. Despite this, BlackRock remains the leading Bitcoin ETF issuer, with a total of $21.7 billion in net inflows. Meanwhile, Grayscale’s Bitcoin Trust experienced a significant outflow, losing $22.1 million.

Flows for the US spot Bitcoin ETFs on Oct. 11 (Green). Source: Farside Investors

Recovery After Outflows

The inflow on 11th October more than covered the $140 million in outflows recorded between 8th and 10th October. It followed a notable 7.3% rally in Bitcoin’s price, reaching a local high of $63,360 before stabilizing around $62,530, according to CoinGecko data.

Ethereum ETFs Struggle

In contrast, Ether (ETH) ETFs continue to face challenges. On 11th October, seven of the nine US-based spot Ether ETFs recorded no inflows, marking the third such occurrence in the last five trading days. The combined Ether ETF flows resulted in a minor $0.1 million outflow, with all inflows coming from the Fidelity Ethereum Fund. Grayscale’s Ethereum Trust lost $8.7 million, while 21Shares, VanEck, and Invesco-issued ETFs showed no movement for over eight consecutive days.

The lack of demand for Ether ETFs, compared to Bitcoin, may be due to regulatory uncertainty and a cautious market sentiment amid the current US political landscape. Some analysts suggest that Wall Street may not fully grasp Ethereum’s complex roadmap, further dampening investor interest.

Bitcoin hovered around $61,000 on October 10, following the release of the latest US Consumer Price Index (CPI) data. The September CPI came in higher than expected, signaling persistent inflation pressures in the US economy. According to the US Bureau of Labor Statistics (BLS), the index increased by 2.4% over the past year.

At the same time, US jobless claims surged to their highest levels since June 2023, creating a dilemma for the Federal Reserve. This divergence between rising inflation and growing unemployment has left economists questioning the Fed’s next move.

A “Nightmare” Scenario for the Federal Reserve

The mixed data has complicated matters for the Federal Reserve, with analysts labeling the situation a “nightmare” due to its conflicting nature. While the central bank recently cut interest rates by 50 basis points, traders are now speculating on whether further rate cuts are likely.

BTC/USD 1-hour chart. Source: TradingView

Crypto trader Michaël van de Poppe suggested that rumors of quantitative easing (QE) and more rate cuts could gain traction, potentially benefiting Bitcoin. Market indicators now show an 87% chance of a 0.25% rate cut at the Fed’s November meeting, according to CME Group’s FedWatch Tool.

Selling Pressures Weigh on BTC Price

Despite optimism around potential Fed actions, Bitcoin’s price faced renewed selling pressures, partly attributed to movements of Bitcoin linked to the Silk Road case. QCP Capital highlighted the volatility, noting that while US equities rallied, crypto markets showed less enthusiasm.

US CPI 12-month % change. Source: BLS

“Selling pressures reignited, possibly due to news of more Silk Road BTC selling and PlusToken ETH selling,” QCP Capital stated. However, they remain hopeful for a bullish rally, with Bitcoin holding strong at the $60,000 support level.

Hopes for an “Uptober” Rally

Despite the current volatility, many analysts expect Bitcoin to recover before the end of the month. Historically, October has delivered an average of 23% gains for Bitcoin, leading traders to remain optimistic about the near-term price outlook.

With uncertainty surrounding the Fed’s next move, Bitcoin’s fate hangs in the balance as traders watch key support levels closely.