Bitcoin's Supply Structure Improves, But Demand Remains Elusive

Bitcoin's on-chain structure is showing signs of improvement as it moves out of speculative hands and into long-term holders, analysts say. However, a meaningful recovery may not be imminent yet.

Axel Adler Jr., an on-chain analyst, notes that Bitcoin's short-term holder supply has fallen to 23.5%, the lowest reading since December 2022-January 2023 market bottom and lower than roughly 96% of Bitcoin's historical trading history. This decline is largely driven by coins aged 3-6 months, which have decreased from 23% to 9% over the last three months.

Adler attributes this shift to declining speculative activity and weaker new capital inflows but warns that selling pressure has not disappeared completely. On the other hand, Bitcoin's long-term holder share has climbed to 52.5%, approaching historical highs, with most of the increase coming from the 6-12 month cohort.

Another on-chain analyst, Darkfost, points out that short-term holders continue realizing heavy losses, with a realized capitalization drawdown of nearly 62% since its October 2025 peak. This is approaching historical capitulation levels, seen in previous Bitcoin bear markets at around 70-75%.

Adler believes both charts tell the same story: Bitcoin's supply is becoming increasingly illiquid as older coins are held onto while younger ones are sold. However, a true regime change would require fresh buyers to return and absorb available supply, which has yet to happen.