Bitcoin (BTC) is exhibiting a complex market structure, characterized by the patient stance of its most dedicated investors clashing with short-term distribution pressures. According to on-chain analytics from Glassnode, long-term holders (LTHs), defined as wallets holding BTC for over 155 days, are showing remarkable conviction. A staggering 45% of Bitcoin's circulating supply has remained dormant for at least three years, a level first seen in February 2024, just after the landmark approval of spot Bitcoin ETFs in the United States. This metric is particularly telling, as it means these coins were acquired before or during the tumultuous 2022 bear market, when the collapse of major crypto entities sent BTC spiraling to $20,000. These holders weathered extreme volatility and chose not to sell, signaling a strong belief in higher future valuations. Furthermore, the portion of supply untouched for five years or more has held steady at 30% since May 2024, reinforcing this long-term bullish sentiment. While some LTHs have been taking profits, a behavior typical during price ascents, the aggregate data suggests this cohort is largely awaiting more significant price appreciation before engaging in widespread selling.

Bitcoin's Breakout and the Looming Altcoin Question

Despite this long-term holder conviction, the market has seen what Gregory Mall, Chief Investment Officer at Lionsoul Global, describes as a "most hated rally." Bitcoin managed to set a new all-time high on May 22, yet the move occurred on relatively thin trading volumes and was met with widespread skepticism. This price action has been primarily fueled by three core factors: renewed optimism around central bank policy, sustained institutional inflows, and a calmer geopolitical landscape. Futures markets are pricing in potential rate cuts from the U.S. Federal Reserve later in 2025, reviving risk appetite. Concurrently, spot Bitcoin ETFs have seen over $16 billion in cumulative inflows year-to-date, with demand from RIAs and private wealth channels remaining robust. This institutional bid is absorbing significant supply. For instance, last year, ETF demand alone was three times higher than the newly minted supply of Bitcoin. This dynamic has pushed Bitcoin Dominance (BTC.D), its share of the total crypto market cap, above 54%, up from a low of 38% in late 2022. Historically, a peak in BTC.D has often preceded a major rally in alternative cryptocurrencies, or altcoins.

Is the Altcoin Rotation Imminent?

The divergence between Bitcoin and the broader altcoin market is stark. As of early June, Ethereum (ETH) remained about 20% below its November 2021 peak, while Solana (SOL), despite strong performance, was still over 30% shy of its all-time high. This lag is typical of historical cycles, where capital first flows into Bitcoin, establishing market confidence, before rotating into higher-beta assets like ETH and other Layer-1s. The ETH/BTC trading pair is a critical barometer for this rotation. A sustained uptrend in ETH/BTC, which recently posted an 81% rally from its April lows, often signals the beginning of a broader "altseason." As of the latest data, the ETH/BTC pair is trading around 0.02358, showing a 1.5% gain in the last 24 hours. Traders are closely watching this ratio for a decisive break above key resistance levels, which could unleash a wave of capital into the altcoin market. The resurgence in DeFi is another positive sign, with Total Value Locked (TVL) surpassing $117 billion, a 31% increase from its April lows, according to data from DeFiLlama. This indicates growing on-chain activity and user confidence.

Institutional Adoption and Market Outlook

The institutional embrace of digital assets continues to accelerate and broaden beyond just Bitcoin. Recent 13F filings revealed that Trans-Canada Capital, which manages Air Canada's pension fund, has allocated $55 million into spot Bitcoin ETFs. This is part of a larger trend where Canadian Schedule 1 banks now hold over $137 million in BTC ETFs. This growing institutional footprint fundamentally alters market dynamics by creating a persistent source of demand. As noted by expert Kevin Tam, the demand from ETFs and corporations last year far outstripped the new supply of Bitcoin. This structural imbalance provides a strong underlying bid for the asset. Looking ahead, the recent approval of crypto Exchange-Traded Notes (ETNs) for retail investors in the UK signals a major regulatory shift. This move, a reversal of a 2020 ban, positions the UK as a competitive hub for digital assets and is expected to further accelerate both retail and institutional adoption across Europe. For traders and advisors, the key takeaway is to anticipate a potential market rotation. While Bitcoin leads, history suggests altcoins like Solana (SOL), currently trading at $151.19, and Cardano (ADA), at $0.5843, may follow with a delay. Diversified strategies, such as thematic baskets focused on Layer-1s or DeFi, could be prudent approaches to capture this potential upside while managing risk in an economic landscape that the OECD warns is becoming increasingly fragile.