Flow of Value In Crypto
As the crypto community assesses the market following recent turbulence, we take a deep dive into market inflows, outflows, and overall sentiment using key metrics.
Despite an extended bull market, many investors find their favorite coins back at—or even below—their prices from the start of this cycle. This raises an important question across Crypto Twitter and in the minds of investors: Where is the money actually flowing?
Exchange reserves
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The chart above art shows the Bitcoin price (in USD) compared to exchange reserves across all exchanges over time. The declining trend in Bitcoin exchange reserves indicates that people are withdrawing their BTC from exchanges and transferring it on-chain. This suggests a shift towards long-term holding rather than preparing for immediate trading or selling, which would usually be done by keeping BTC on exchanges. A notable nuance on this point is that exchange reserves are not solely indicative of user withdrawals and deposits on any given exchange, exchange reserve data is also indicative of possible treasury management strategies employed by any given exchange (more on this during coverage of USDT exchange reserves).
Exchange reserves are now at all-time lows. This strongly suggests that market participants are increasingly bullish on Bitcoin. Many are opting to secure their BTC on-chain, signaling confidence in Bitcoin's future value. This behavior reduces the immediate supply of BTC available for sale on exchanges, making large-scale sell-offs less likely and reinforcing a bullish market sentiment.
During the bear market's peak lows in late 2022, there was a similar noticeable decline in exchange reserves (although more immediate). This likely marks a period where significant buyers entered the market, accumulating BTC and moving it off exchanges for long-term storage. This behavior often aligns with the end of a bear market, as major investors see value at lower prices and aim to hold over a longer horizon. Throughout this bull cycle we have seen an constant and extensive period of exchanges seeing significant outlflows, as previously stated, indicating general bullish on-chain accumulation.
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We observe a similar trend for Ethereum, however, its rally throughout the bull market has been significantly less substantial compared to Bitcoin. This suggests that exchange reserves for any given cryptocurrency serve as just one indicator of on-chain accumulation and overall market sentiment. Therefore, to better understand Bitcoin’s relative strength and the flow of value in the current crypto market, a deeper analysis is necessary.
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An analysis of XRP Exchange reserves do clarify one point, which actors are accumulating which cryptocurrencies throughout this cycle. In stark contrast to Ethereum and Bitcoin, we see that the sum of XRP on exchanges has seen no significant change over the past year. This indicates that the investors accumulating XRP are a different userbase than those that are accumulating Bitcoin and Ethereum and offramping the currencies on-chain. Overall, this points at XRP investors being either, or both less crypto-native retail users or investors that have arguably less conviction in the long term.
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Despite USDT’s dominance falling relative to the entire crypto market, the overall exchange reserves of USDT are up significantly over the past 12 months. Specifically, USDT exchange reserves have increased from $7B to over $27B since February 2024. As aforementioned, this increase in exchange reserves for USDT can be indicative of two specific actors and their respective actions. Either (or both) users are selling their assets on chain for USDT and depositing this USDT on exchanges in anticipation of wanting to off-ramp; or, exchanges are employing treasury management strategies and currently derisking, reflected in their desire to hold less cryptocurrency on their books and hold as many stablecoins as possible.
Dominance Comparisons
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The dominance chart shows a clear reallocation of capital within the cryptocurrency market, with Bitcoin emerging as the primary beneficiary. Rising BTC dominance indicates inflows into Bitcoin, suggesting it is being viewed as a "safe haven" asset amid not just market uncertainty, but even during risk-on periods. This behavior is typical during periods of risk-off sentiment when investors seek stability, although even amidst the overall bullish market sentiment across various industries including Stocks and commodities, we have continued to see Bitcoin trade not just as a safe haven, but also equally as a speculative asset. Bitcoin's increasing share of the market suggests strong accumulation, likely driven by institutional interest and long-term holders positioning for resilience.
In contrast, ETH and altcoin dominance have been declining, reflecting significant outflows from riskier crypto assets despite Bitcoin’s strength.This trend indicates reduced confidence in altcoins, likely due to market uncertainty or bearish conditions. The tandem decline of Ethereum and broader altcoins highlights their grouping as higher-risk investments, which are currently being de-prioritized in favor of Bitcoin.
USDT dominance is also falling, signaling a reduction in stablecoin holdings. This typically suggests that funds are re-entering the cryptocurrency market. However, the simultaneous rise in Bitcoin dominance makes it clear that these inflows are concentrated in Bitcoin rather than Ethereum or other altcoins. This movement indicates a selective return of capital into crypto markets, with Bitcoin absorbing the majority of liquidity.
Overall, the chart reflects a bullish sentiment for Bitcoin as it consolidates its position as the market leader. Meanwhile, altcoins and Ethereum have faced a bearish outlook, with reduced interest and outflows signaling risk aversion. The decline in USDT dominance further underscores that some liquidity is re-entering the crypto market, but this capital is largely favoring Bitcoin, leaving other assets in the shadows. This pattern aligns with a cautious but focused investment approach in the current market cycle.
Altcoin vs Bitcoin Marketcaps
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The chart above showcases the widening divergence between Bitcoin's market cap and the combined market cap of altcoins (excluding Ethereum and stablecoins) over time. This divergence underscores the ongoing market trend where Bitcoin is increasingly dominating capital flows within the cryptocurrency ecosystem. As Bitcoin’s market cap grows, driven by its rising price and renewed interest as a store of value, altcoins are struggling to keep pace, once more indicating a significant reallocation of funds toward Bitcoin.
On the other hand, the altcoin market cap (pink line) shows limited growth and even stagnation in some periods, once more emphasizing a reduced appetite for riskier, less-established assets. This trend reflects a bearish outlook for altcoins, as funds appear to flow out of speculative assets and into Bitcoin. This behavior aligns with a risk-off sentiment in the broader market, where we’ve seen extensive bullish price actions and investors begin prioritize capital preservation over high-risk, high-reward opportunities.
Transfer Volume
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The chart above highlights a significant decline in Bitcoin transfer volume from smaller wallets (under $10k) compared to the 2021 all-time high, despite a substantial increase in overall transaction volume and significantly higher Bitcoin prices during the current cycle.
This trend suggests that retail participation has diminished, with smaller investors playing a reduced role in Bitcoin’s market dynamics. The growing transfer volume is instead being driven by larger entities, indicating increased institutional involvement and demand.
This shift reflects Bitcoin's transition toward being a more mature and widely accepted asset, appealing to high-net-worth individuals and institutions, while smaller investors may be seem proportionally deterred by higher prices or have shifted focus to other speculative assets.
1 Month Inflows
![](https://cdn.prod.website-files.com/657e6cd1b1ac103f4c122716/67a9d8fb53a83034e0034570_AD_4nXcw66WF0s3lAEHANZDoVw7pee-LQ1D51JwyCqAz18OSWfgjstSgMmH2BlXG9PHRi01zB5VjsN0NuZRZB927zVyJn1Czuh7pg0dKq_vIfzxVBsfZWAIJruIplRAgUF6nSiCqeRR_Hg.png)
The chart above illustrates Bitcoin's trading activity during January 2025, highlighting inflows and buy orders across various wallet sizes. The heatmap in the upper panel reveals significant trading volume concentrated at specific price levels, indicating liquidity clustering by larger entities actively managing buy and sell orders.
The bottom panel, which tracks Cumulative Volume Delta (CVD) by wallet size, shows that wallets in the $100k to $1M and $1M to $10M ranges have been the primary drivers of net buying activity, while smaller wallets ($100 to $10k) exhibit reduced influence.
This pattern suggests that larger entities, such as institutions or high-net-worth investors, are dominating inflows, leveraging significant liquidity to accumulate positions.
In contrast, smaller retail wallets once again appear to have a diminishing role, likely reflective of shifting market dynamics where Bitcoin is increasingly seen as an asset for larger players. This trend once again aligns with a broader narrative of institutional adoption and retail hesitation at current price levels.
Pumpdotfun
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Pumpdotfun, a prominent platform for launching meme tokens on the Solana blockchain, has garnered significant attention due to its ease of use related to creating memecoins. As of January 2025, reports indicate that Pumpdotfun has earned approximately 2,016,391 SOL, valued at around $398 million at current prices.
The platform has been observed transferring large amounts of SOL to the Kraken exchange. For instance, in late November 2024, Pump.fun sent 100,000 SOL (approximately $22 million) to Kraken, bringing the total transferred to over $94 million within a month. These significant movements have led to concerns about potential impacts on Solana's price and the broader ecosystem as the ecosystem’s popularity over the last year has largely been led by widescale pumpdotfun adoption.
Additionally, tokens created on Pump.fun have accounted for a substantial portion of decentralized exchange (DEX) transactions on Solana, representing 62.3% of all Solana DEX transactions in November 2024.
As of early February 2025, Pump.fun has once again been actively transferring significant amounts of Solana (SOL) tokens to centralized exchanges, particularly Kraken. On February 7, 2025, the platform deposited 140,285 SOL, valued at approximately $26.6 million, into its Kraken account. This transaction contributes to a cumulative total of 1,021,162 SOL, worth around $208.32 million, sent to centralized exchanges since the beginning of the year.
In terms of sales, Pump.fun has sold 264,373 SOL for $41.64 million in USDC. These activities indicate a strategic approach to liquidity management and (logical) profit realization by the platform.
Despite the concerns about Pumpdotfun profit taking, these realized profits seem partially offset by recently released statistics on the sum of Solana locked due to Pumpdotfun’s inherent infrastructure. Pump.fun employs a bonding curve mechanism to manage token pricing and liquidity. In this system, as users purchase tokens, the price increases along a predefined curve, and the funds are locked within the platform's liquidity pool.
If a token's market capitalization reaches a specific threshold—$69,000 for Solana-based tokens—Pump.fun automatically deposits $12,000 worth of liquidity into decentralized exchanges like Raydium and burns the corresponding liquidity provider tokens, effectively removing that SOL from circulation.
However, many tokens do not reach this threshold and remain within the bonding curve. As of November 2024, it's estimated that approximately 162,789 SOL are locked in these bonding curve contracts, rendering them effectively unusable. This mechanism leads to a decrease in the circulating supply of SOL, as these locked tokens are not accessible for other uses within the ecosystem. Ultimately, it can be argued that not only is this profit taking logical, but largely offset by pumpdotfun’s inherent infrastructure, wherefore the critiques of pumpdotfun’s profit taking are largely unwarranted.
Additionally, when assessing Solana’s increased overall dominance in the entire Web3 market, it becomes clear that Pumpdotfun can not be denied the crown in relation to the reason behind Solana’s overall market dominance in the last 12 months.
Solana Dominance
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Solana continues to dominate decentralized exchange (DEX) activity, demonstrating impressive growth in both trading volume and user adoption. By January 2025, Solana accounted for the largest share of total DEX cross-chain volume, surpassing all other ecosystems. Its dominance can be attributed to its high transaction throughput and minimal fees, which appeal to traders of all sizes which has accrued a substantial userbase for solana primarily taking form of memecoin traders.
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Solana has also seen a notable rise in active addresses, exceeding 10 million by the start of 2025, signaling its growing user base and increased activity within its DeFi landscape.
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Solana's ability to retain such a large share of DEX users highlights its ecosystem’s resilience, especially as it regained momentum after challenges in late 2022. The ecosystem’s popularity can largely be attributed to the aforementioned pumpdotfun and the immense userbase it has accrued in relation to quick memecoin launches and consistent runners.
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The trading activity on all DEXs reveals a healthy distribution across various trade sizes, emphasizing the platform's broad appeal. Low-value trades, defined as transactions below $100, make up 20.5% of the total volume. Medium-value trades, ranging from $100 to $5,000, dominate the trading landscape, representing 27% of the total volume.
High-value trades, between $5,000 and $50,000, account for roughly 20.5–25% of all DEX activity. Meanwhile, hyper-value trades exceeding $50,000 constitute about 20% of the total volume. Although fewer in number, these trades significantly impact market dynamics.
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As seen above, Solana’s share of hyper-value trades indicates strong participation from institutional players and whales. Notably, between December (2024) and January (2025), over $1.3T of hyper-value trader volume was seen on Solana DEXs, with Solana commanding the largest share among competing ecosystems by a landslide. This canmost probably be linked almost solely to the launch of “The Official Trump Coin” or “$TRUMP”, which naturally onboarded many high net worth individuals not just onto Solana, but onto cryptocurrency as a whole.
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A similar trend, but overall more balanced, can be seen for High value traders on Solana. A significant peak in volume from these traders can be seen in January. Which once again, can most probably be largely attributed to the aforementioned trump launch.
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As you may expect, the month over month volume distribution becomes increasingly more balanced as the trader values go down proportionally. An interesting note to make is that Ethereum DEX volume has decreased significantly for the Medium Value Traders in comparison to the High Value traders mentioned above, likely a reflection of most retail users not believing it Ethereum fees to be sustainable in thel ong term with their sum of cash on hand.
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Finally, we see Low value traders on Solana, completely dominating the total DEX volume across exchanges for trades worth less than $100. As to be expected in relation to the popularity of Solana as the hub of memecoins and low fees on the market.
Conclusion
As the market continues to evolve, the current trends in exchange reserves, capital dominance, and trading behavior suggest a fundamental shift in how investors perceive and allocate assets within the crypto ecosystem.
Bitcoin’s rising dominance and sustained outflows from exchanges indicate a strong preference for long-term holding, particularly among institutional players. Meanwhile, Ethereum and altcoins have struggled to capture the same level of enthusiasm, with capital reallocating away from speculative assets in favor of Bitcoin.
Stablecoin movements further highlight this transition, as rising USDT reserves suggest that liquidity remains on standby, potentially awaiting better market conditions or signaling institutional risk management strategies. At the same time, the decline in USDT dominance points to a selective reinvestment into crypto, with Bitcoin as the primary beneficiary.
Solana’s ascent as the dominant chain for decentralized exchange activity underscores a broader shift in user preferences, particularly among traders seeking low fees, high-speed transactions, and quick returns. The memecoin frenzy, spearheaded by platforms like Pumpdotfun, has played a crucial role in attracting both retail and institutional traders to Solana, reshaping the broader market landscape. Despite concerns for Solana price around Pumpdotfun’s profit-taking, the structural mechanics of Pumpdotfun appear to balance supply-side pressure, reinforcing Solana’s continued market leadership in this sector.
Ultimately, the ongoing trends reflect a maturing market where institutional players and long-term holders are exerting greater influence. Bitcoin’s resilience, coupled with Solana’s rapid adoption, indicates that while speculative activity remains a major driver in crypto, market participants are increasingly favoring assets with stronger narratives and clearer value propositions.