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Author: Tanay Ved, Source: Coin Metrics, Compiler: Shaw Bitcoin Vision
Summary of key points
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Bitcoin’s supply is turning over, with long-term holders being allocated in batches and new participants gradually absorbing the supply, suggesting a smoother transfer of ownership.
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Spot Bitcoin ETFs and DATs such as Strategy have absorbed approximately 57% of short-term holder supply growth since the start of 2024 and now account for nearly a quarter of all active Bitcoin over the past year.
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The continued stabilization of realized volatility is indicative of a more mature market structure characterized by strong institutional demand and prolonged cyclical rhythms.
Introduction
After reaching all-time highs earlier this year, Bitcoin has been in a consolidation phase, with prices briefly falling below $100,000 for the first time since June.Macroeconomic headwinds, stock market weakness and one of the largest liquidations in cryptocurrency history have combined to dampen sentiment, slow inflows and raise questions about the sustainability of the bull market.Additionally, there are growing concerns that large investors, or “OG whales,” will move or sell early Bitcoin holdings, putting pressure on Bitcoin and the cryptocurrency market as a whole.After recent declines, the total cryptocurrency market capitalization is now close to $3.6 trillion.
Beneath the surface, Bitcoin on-chain data provides important context.In this week’s Coin Metrics State of the Network report, we explore how changes in Bitcoin holder behavior and key demand drivers are impacting market sentiment and defining the tempo of this cycle.By analyzing changes in active supply and demand channels, we will explore whether recent price movements reflect end-of-cycle profit-taking or a deeper structural shift in the foundation of Bitcoin ownership.
Supply distribution meets institutional absorption needs
active supply
First, let’s look at Bitcoin’s active supply, which reflects how active a Bitcoin is based on how long it’s been held, divided by the duration of the most recent on-chain transaction.This helps us understand how the Bitcoin supply is distributed between inactive (dormant) parts and parts with more recent transactions (also known as “HODL Waves”).
Below, we isolate the portion of the Bitcoin supply that has not changed in more than a year as an indicator of long-term holder supply (LTH).Historically, in bear markets, this metric rises as Bitcoin concentrates into the hands of long-term holders, while in bull markets, it falls as these holders begin to move Bitcoin, realize profits, and diversify their investments.
Data source: Coin Metrics Network Data Pro
Nowadays,About 52% of Bitcoin’s 19.94 million circulating supply has been idle for more than a year, down from about 61% at the beginning of 2024.The large increases during the bear market and the large decline during the bull market have significantly moderated, with progressive distributions occurring in the first quarter of 2024, the third quarter of 2024, and more recently in 2025.This suggests that long-term holders are allocating Bitcoin on a more consistent basis, reflecting a longer-term shift in ownership.
ETFs and DATs emerge as demand drivers
Instead, the supply of short-term holders (Bitcoins active within the past year) has steadily increased since 2024, with previously “dormant” Bitcoins returning to circulation.This coincides with the launch of spot Bitcoin exchange-traded funds (ETFs) and the acceleration of Digital Asset Treasury (DAT) reserves, both of which have introduced new, sustained demand channels that absorb reallocated supply.
As of November 2025,The number of active Bitcoins in the past year was 7.83 million, an increase of approximately 34% from 5.86 million at the beginning of 2024, this is mainly due to the re-entering circulation of previously dormant Bitcoin.During the same period,Reserve holdings of spot Bitcoin ETFs and Strategy increased from approximately 600,000 coins to 1.9 million coins, absorbing nearly 57% of the net increase in supply from short-term holders.Currently, these instruments combined account for approximately 23% of the supply to all short-term holders.
While inflows have declined in recent weeks, the overall trend reflects a gradual shift of supply into more stable, longer-term holding channels, a unique feature of this cycle’s market structure.
Data source: Coin Metrics Network Data Pro and Bitbo Treasuries (Note: ETF supply does not include Fidelity’s FBTC, DAT supply includes Strategy)
Behavior of short-term and long-term holders
Realized profitability trend reinforces moderating pattern emerging in Bitcoin supply dynamics.The Realized Profit and Loss Ratio (SOPR) measures how well holders spend their Bitcoins at a profit or loss, and it provides a lens into the behavior of different groups of holders over market cycles.
In previous cycles, the profits and losses of long-term and short-term holders tended to fluctuate sharply and simultaneously.But recently, the relationship has diverged.longThe SOPR value for futures holders is slightly above 1, indicating that they are continuing to make profits and sell moderately when the market strengthens..
Data source: Coin Metrics Network Data Pro
The SOPR for short-term holders has been hovering near the break-even point, which partly explains the recent cautious sentiment in the market, as many short-term holders hold positions close to cost price.The divergence between different holding groups reflects that the market is in a more moderate phase, with institutional demand absorbing reallocated supply, rather than experiencing the rapid pumps and dumps seen in the past.If the short-term SOPR can continue to break above 1, it may mean that market momentum is building.
While a broader correction will still compress profitability across groups, the overall trend suggests that supply turnover and profit realization will gradually unfold, resulting in a more balanced structure and extending Bitcoin’s cyclical rhythm.
Declining Bitcoin Volatility
This structural easing is also reflected in Bitcoin’s volatility, which has continued to decline over time.Bitcoin’s 30-day, 60-day, 180-day and 360-day actual volatility has stabilized at around 45%-50%, well below its past periods of wild swings leading to pronounced boom and bust cycles.Today, Bitcoin’s volatility is getting closer to that of big tech stocks, signaling its maturation as an asset.This reflects both improved liquidity and a strengthening institutional investor base.
For asset allocators, this reduction in volatility could increase Bitcoin’s appeal in portfolios, especially as correlations with macro assets like stocks and gold remain unstable.
Data source: Coin Metrics Market Data Pro
Conclusion
The trend on the Bitcoin chain shows that this cycle is unfolding in a more moderate and lasting way, and has not yet seen the frenzied surge that was common in previous bull markets.Supply allocation occurs in waves, with most being absorbed by more durable demand channels such as ETFs, DATs, and broader institutional holdings.this transformationIt indicates that the market structure will become more mature, volatility and circulation velocity are decreasing, and the cycle is also lengthening..
Despite this,Market momentum remains dependent on continued demand.Flattening of ETF inflows, pressure on some DATs, recent market liquidations, and SOPR for short-term holders at break-even points all point to a market readjustment.A continued increase in the supply of long-term holders (Bitcoins that have not been traded for more than a year), SOPR rising above 1, and a new round of inflows from spot Bitcoin ETFs and stablecoins may be key signals for a strong return to the market.
Looking to the future,Easing macroeconomic uncertainty, improving liquidity conditions, and progress on market structure regulation could help capital inflows accelerate again and extend the bull run.Although market sentiment has cooled, the market still maintains a relatively healthy trend after the recent deleveraging adjustment, which is due to the growth of institutional channels and the popularization of on-chain infrastructure.
