Bitcoin at Crossroads: CEX Hits $15B as Short-Term Holder Markups Flash Warning- Dumping Ahead for BTC?

Key Insights

• Bitcoin is at risk of short-term dumping from short-term holders as markup holds between 15-20%.

• Bitcoin's daily CEX volume hits $15 billion, while the ETF holds at $1.7 billion.

Short-Term Holder Markups Define the Current Market Phase

Bitcoin is trading with only a 4% markup above the average purchase price of short-term holders (STHs), a critical threshold that signals fragile demand in the market.

Source: Cryptoquant

This reflects the behavior of newer market participants and often dictates whether rallies can be sustained or if profit-taking pressure will dominate.

The timing of this setup coincides with the U.S. Federal Reserve’s recent interest rate cut, which has generally supported risk assets. However, traders are warned to remember the “buy the rumor, sell the news” dynamic, as optimism often gives way to volatility once the policy shift becomes official. For Bitcoin, that means caution is warranted despite favorable macro headlines.

Historically, STH markups have been a powerful indicator of market psychology. When the markup rises to 15–20% above the average cost basis, many holders begin to sell, adding downward pressure. During Bitcoin’s last all-time high, the markup peaked at just 13%, showing how quickly profit-taking emerged at elevated levels.

This is a stark contrast to earlier phases of the bull market in January 2023 and 2024, when the markup reached as high as 40%. At that time, investors were still eager to buy, confident that prices had further room to run. Now, however, the market has entered a mature stage of the cycle, and buyers are reluctant to enter at extreme highs for fear of being stuck underwater for years.

The result is that obvious discounts are now required to attract demand. Without cheaper entry points, sidelined capital may remain inactive, limiting the momentum of any rally.

CEX Volumes Still Dominate Bitcoin’s Price Action

While investor psychology sets the backdrop, the mechanics of trading remain crucial. According to Axel Adler, centralized exchanges record $15.8 billion in daily average trading volume, compared to just $1.7 billion per day for U.S. spot ETFs. That makes the CEX-to-ETF ratio 9.2, with ETFs accounting for only about 10% of total volume.

Source: Cryptoquant

This dynamic means that although ETFs provide liquidity and institutional exposure, Bitcoin’s short-term price moves are still largely driven by trading activity on CEXs. Their influence dwarfs ETF flows, which act more as a stabilizing force than as a driver of major price swings.

ETFs Add Support but Not Control

ETF inflows are still meaningful in one sense: they provide a steady base of liquidity that can help stabilize trends. This is particularly useful in a market where CEX activity is dominated by leveraged trading and speculative moves. However, ETFs remain too small to offset aggressive selling when short-term holders begin to dump coins.

In essence, ETFs may cushion the market’s volatility, but they cannot yet dictate Bitcoin’s trajectory. The real power still lies in centralized exchanges, where volumes are nearly ten times greater.

Bitcoin Market at a Crossroads

Taken together, short-term holder markups and trading volume patterns highlight a fragile point in Bitcoin’s bull cycle. With only a modest 4% markup, the market is balanced on a knife’s edge: discounts could attract strong demand, but profit-taking could just as easily drag prices lower.

Meanwhile, ETFs add credibility and institutional stability, but it is still the trading behavior on centralized exchanges that drives the price. As the cycle matures, Bitcoin investors should be prepared for volatility and recognize that demand will only surge at lower entry points.