Long-term investors have started moving coins that sat untouched for years, while behind the scenes, the open-source community is engaged in one of its fiercest debates in years over how much data truly belongs on the Bitcoin network.
Dormant Wallets Awaken
Data from several blockchain analytics firms suggest that since mid-October, tens of thousands of bitcoins—worth roughly $7 billion—have been withdrawn from long-inactive wallets. These movements mark the first major wave of dormant coin activity in the latter half of 2025.
The timing has drawn attention because it coincides with Bitcoin’s retreat from its record peak above $125,000 earlier this month. The asset now trades near $113,000, a level many traders see as the line between cooling enthusiasm and renewed accumulation.
Analysts interpret the recent wallet activity as a shift in market behavior. Smaller and mid-sized holders have been reducing exposure, while large “whale” wallets—those containing tens of millions of dollars in BTC—have quietly increased their positions. In essence, patient long-term investors seem to be cashing in, while deep-pocketed participants are positioning for what they may view as the next accumulation phase.
The Decline of Illiquid Supply
At the same time, the share of Bitcoin supply considered “illiquid,” meaning locked away in wallets with little spending history, has declined slightly. This has sparked concern that price rallies could lose steam unless new demand emerges. Still, the overall profitability of holders remains high: more than four-fifths of all circulating Bitcoin is still in profit, according to several market trackers.
The illiquid supply of $BTC has seen a notable decline over the past month. This metric typically tracks coins held in wallets with low spending activity, often indicating long-term conviction. A decrease could suggest some holders are taking profits or reallocating their positions.
— Glassnode (@glassnode) November 1, 2025
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A separate study by Fidelity Digital Assets projected that Bitcoin’s scarcity will intensify in the coming decade, with nearly half of all coins potentially becoming illiquid by 2032. The report suggested that regulatory progress and potential sovereign interest in holding Bitcoin could amplify this long-term supply squeeze.
Internal Battle Over Bitcoin’s Direction
While traders watch price charts, developers are fighting a different kind of battle—one over Bitcoin’s purpose and purity. A new proposal called BIP-444 has ignited a storm of debate within the technical community.
The discussion stems from a recent software update that expanded how much data could be embedded in Bitcoin transactions. Advocates saw it as a step toward flexibility, allowing users to include additional information such as Ordinals inscriptions. But critics feared it opened the door to abuse, including the risk of illegal or non-financial data being permanently recorded on the blockchain.
BIP-444 aims to impose temporary limits on data-heavy transactions by restricting the size of certain transaction scripts and OP_RETURN outputs. Its anonymous author argues this would protect node operators from potential legal exposure while giving developers time to find a longer-term fix. Veteran coder Luke Dashjr, known for his firm stance against Ordinals, has expressed support for the idea, calling it a necessary pause rather than a permanent policy shift.
The BIP-444 proposal is not about censorship, but about responsible development and mitigating potential legal risks for node operators. It's a temporary measure to allow for more thoughtful consideration of data on-chain.
— Luke Dashjr (@LukeDashjr) November 1, 2025
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Clash of Ideologies: Freedom vs. Control
However, not everyone agrees. Critics claim the proposal amounts to censorship, warning that controlling what kind of data can be stored on the blockchain undermines Bitcoin’s principle of open participation. Prominent community members have argued that any move to filter or reject transactions—even temporarily—could set a dangerous precedent for financial freedom.
Security expert Jameson Lopp also questioned whether the concerns about legal liability hold any weight, emphasizing that running a Bitcoin node already involves consenting to the network’s existing rules.
The proposal has yet to reach Bitcoin’s official mailing list for formal discussion, but it has already sparked widespread commentary across X and developer forums. Whether it gains traction or not, the controversy reveals an ongoing philosophical divide: is Bitcoin a purely monetary network, or a public ledger open to all kinds of expression?
A Network in Transition
Between the awakening of dormant coins and the clash over technical values, Bitcoin is navigating both economic and ideological turbulence. The selling from older wallets has raised questions about whether confidence is shifting, while the BIP-444 dispute has once again put decentralization and freedom of use at the heart of Bitcoin’s identity crisis.
As new money waits for direction and old debates resurface, one thing remains constant—Bitcoin’s evolution is as much about human conviction as it is about code and supply.