Bitcoin supply tightens as demand stays weak

Bitcoin is shifting from speculative traders to long-term holders, but weak demand is preventing the tightening supply structure from producing a convincing price recovery.

On-chain indicators show that coins are changing hands less frequently as investors with longer holding horizons expand their share of the network’s realised value. Short-term holders now account for about 23% of Bitcoin’s realised capitalisation, a multi-year low, while the long-term holder share has climbed to roughly 52%.

The transition resembles conditions observed near the 2022-2023 bear-market bottom, when speculative activity contracted and coins gradually moved into wallets less inclined to sell. Such redistribution can create a stronger foundation by reducing liquid supply and limiting the volume available to short-term traders.

However, the change in ownership does not automatically signal that Bitcoin has reached a durable bottom. New capital has yet to enter the market in sufficient volume to absorb selling pressure and drive prices decisively higher. Transaction activity, demand growth and momentum indicators remain subdued, leaving the market dependent on existing holders rather than an expanding pool of buyers.

Bitcoin was trading near $63,000 on Saturday, down by about 1% over 24 hours and close to half its October 2025 record of more than $126,000. Its market value stood at approximately $1.26 trillion, with about 20.06 million coins circulating from the protocol’s maximum supply of 21 million.

Long-term holders have accumulated hundreds of thousands of coins during the downturn. Their total holdings rose to about 16.34 million Bitcoin by mid-July after an accumulation phase lasting more than six months. The pattern suggests that investors with greater conviction are using lower prices to increase exposure, even as traders seeking faster returns withdraw.

The movement of coins towards low-activity wallets reduces the market’s immediate sell-side risk. Long-term holders are generally less sensitive to daily price swings and are more likely to retain their positions during volatile periods. A lower proportion of speculative supply can also limit forced selling when leveraged positions are liquidated.

Yet the same decline in coin movement can reflect caution rather than confidence. Lower turnover may indicate that holders are waiting for clearer economic, regulatory or market signals before deploying additional capital. Without stronger spot buying, reduced supply alone may produce stability rather than sustained appreciation.

Research covering on-chain and off-chain activity has found that demand pressures play a significant role in Bitcoin’s long-term price formation. On-chain demand influences both short- and long-term movements, while activity on exchanges and other off-chain platforms remains crucial because a large proportion of cryptocurrency trading does not settle directly on the blockchain.

The distinction is important because wallet data can identify changes in holder behaviour but cannot fully measure institutional orders, exchange liquidity, derivatives positioning or investment flows through regulated products. A market can therefore appear structurally tighter on-chain while remaining vulnerable to weakness in spot and derivatives demand.

Bitcoin’s decline from last year’s peak has also changed corporate and institutional behaviour. Buyers that added the asset aggressively during the earlier advance have become more selective as volatility, financing costs and balance-sheet risks rise. That slowdown removes a source of demand that previously supported prices during periods of profit-taking by established holders.

Broader risk conditions remain another constraint. Bitcoin has become more closely connected to technology shares and other speculative assets, making it sensitive to interest-rate expectations, liquidity conditions and shifts in investor appetite. Academic analysis of earlier market cycles found that the cryptocurrency increasingly responded to economic data and movements in conventional financial markets rather than behaving as an independent safe-haven asset.

Analysts are watching for an increase in active demand, including stronger transaction growth, expanding realised capitalisation and sustained buying by newer market participants. A rise in the short-term holder share accompanied by higher prices could indicate that fresh capital is entering without immediately overwhelming the market with speculative leverage.