Bitcoin Positions for More Profits as Selling Liquidity Drys Up: Bitfinex Alpha

As 2025 begins, the possibility of bitcoin (BTC) experiencing a significant correction in this first quarter is high. However, the decrease in sell-side liquidity suggests that the cryptocurrency could also see further gains in the medium term.

In the latest edition of the Bitfinex Alpha report, analysts revealed that much of the expected downward pressure for the first quarter of 2025 would have already subsided during Bitcoin’s double-digit correction in mid-December. As liquidity is drying up, BTC may have a more positive quarter.

Bitcoin selling liquidity dries up

According to the report, bitcoin selling liquidity is rapidly falling to multi-month lows. This tightening of BTC’s available liquidity can be seen in the liquidity inventory ratio, a metric that measures how long the current supply can meet demand.

In October 2024, the indicator showed that BTC supply could meet demand for 41 months; however, it is currently around 6.6 months. During the Q1 and Q4 2024 bitcoin surges, the market also witnessed this type of decline in selling liquidity, indicating that these moves coincide with periods of strong market activity.

Bitfinex analysts revealed that BTC miners are a cohort of market participants driving the fall in sell-side liquidity. Historically, the market has seen significant spot selling pressure from miners during the middle years. This is because these entities unload their reserves and stakes to raise capital to upgrade their machinery and stay afloat while the Bitcoin network cuts its block rewards in half.

However, miners have slowed down their BTC sales since April 2024. Their asset flows to exchanges have declined even more rapidly since early 2025, indicating that they are selling fewer bitcoins.

HODLing, not selling

Notably, miners reported a slight increase in their flows to the exchanges in November 2024 as BTC soared after the end of the US presidential election, but they have slowed down the pace of profit taking since then

Bitcoin miners currently have profits, which has allowed them to operate easily. They choose to hold their BTC instead of selling it.

“Furthermore, the NUPL (net unrealized gains and losses) for miners remains very positive at around 0.5, suggesting that miners are still in a strong position, with substantial unrealized profits and a preference to hold their BTC at this stage,” Bitfinex added. .

Meanwhile, miners aren’t the only market participants not selling their BTC; long-term holders are also HODLing.

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