Onchain analytics platform CryptoQuant reports that Bitcoin long-term holders are reducing selling activity, a pattern historically preceding bullish market cycles. Data indicates the share of realized capitalization held by investors with coins aged 18 months or longer peaked at 26.98% on September 16, marking the highest level since mid-November 2024. CryptoQuant analysts observe that when this proportion rises and subsequently begins to decline, it often signals the start of a strong rally. The firm notes that while the trend reversal is currently modest, suggesting early-stage bullish conditions, the shift implies potential upside for both price appreciation and rally duration.
Concurrently, investment firm Galaxy Digital characterizes the current market environment as the "shallowest" bear market on record, citing a maximum drawdown of -53% from all-time highs. Galaxy highlights a significant decrease in supply pressure from dormant coins; BTC unmoved for five years or more averaged 34,000 BTC per month in 2026, half the volume seen in 2024. This reduction follows a period where 1.11 million BTC was distributed since October 2024, largely absorbed by spot ETFs and digital asset treasury companies. Despite these positive structural indicators, specific cohorts remain under water; the 18-month-to-two-year holder group has a cost basis of $93,193 and is currently in net loss, whereas older cohorts remain in aggregate profit.
The convergence of reduced distribution from long-term holders and declining supply pressure from dormant coins suggests a tightening of available liquidity, which can support price stability even amid broader market uncertainty. CryptoQuant’s identification of a historical pattern where rising then falling long-term holding shares precede rallies provides a technical framework for interpreting current onchain behavior as an early signal rather than a confirmed breakout. However, the distinction between the 18-month cohort’s losses and the profitability of older holdings indicates a fragmented market sentiment, where different investor classes react differently to price levels near $93,193 versus the recent high of $126,200.
Galaxy Digital’s assessment of the current downturn as the shallowest on record underscores a structural resilience in Bitcoin markets, potentially driven by institutional absorption mechanisms like spot ETFs. The halving of monthly outflows from five-year-plus dormant wallets reduces the immediate sell-side overhang, creating a more favorable supply-demand balance for upward momentum. Nevertheless, the persistence of unrealized losses among mid-term holders may introduce volatility if those investors choose to liquidate positions during minor price recoveries, testing the durability of the emerging bullish cycle.
