According to a new market analysis by CryptoQuant, Bitcoin may be approaching a supply shock phase as retail investors sell under pressure while long-term holders keep their coins inactive.
Conclusion
- CryptoQuant says Bitcoin could enter a supply shock phase as kits remain inactive and retail investors sell at a loss.
- About 71% of Bitcoin UTXOs remain profitable, while about 28% are now underwater, reflecting stress among short-term holders.
- Bitcoin exchange reserves are down by around 204,000 BTC in 2026, which is likely to tighten supply and set the stage for a price rally.
At the time of reporting, Bitcoin (BTC) was trading around $69,446, and blockchain data shows that 71.41% of all unspent transaction results (UTXO) remain in profit.
UTXOs represent Bitcoin that has not been spent since its last transaction and are often used to determine the profitability of an investor on the network.
Despite the majority of holders sitting in profit, about 28.58% of UTXOs are currently in losses, indicating that some market participants, primarily short-term traders, are experiencing financial stress.
Analysts at CryptoQuant say this pressure is mostly concentrated among short-term holders rather than large investors.
Retail sales are different from the dormant state of the whale
Data from the yield to yield ratio for short-term holders (SOPR-STH) near 0.97 indicates that this group is selling coins at a loss.
This dynamic suggests that the current selling pressure is primarily driven by retail investors exiting positions during periods of market volatility.
Meanwhile, large holders, often referred to as whales, have largely remained inactive, with older bitcoin holdings showing little movement on the chain.
Analysts interpret this lull as a sign that institutional or long-term investors are confident in the broader outlook for the Bitcoin market.
Exchange reserves decrease as coins leave trading platforms
Another key signal highlighted in the analysis is the continued decline in Bitcoin exchange reserves.
Over the year, reserves fell from 2.990 million BTC to 2.786 million BTC, representing a decrease of about 204,000 BTC on trading platforms.
Such withdrawals often indicate that investors are moving coins to cold storage or long-term storage wallets rather than for immediate sale.
According to CryptoQuant, this trend indicates that coins are gradually moving from “nervous hands” to long-term holders.
The combination of declining exchange reserves and inactive wallets could set the stage for a potential supply shock.
A supply shock occurs when the supply side’s liquidity decreases, meaning there are fewer coins on exchanges to sell. If the demand increases in such conditions, the price may rise sharply.
CryptoQuant analysts believe that the current market environment reflects the “education of fear”, where retail capitulation gradually clears excessive selling pressure.
If this period of forced selling ends while long-term holders hold their positions, the market may enter a phase where reduced supply increases the impact of new demand on the price of Bitcoin.
