The recent decline in Bitcoin prices has prompted an analysis from cryptocurrency analytics firm K33 Research. Their findings suggest that the selling pressure stemming from long-term investors is nearing a saturation point following an extensive distribution phase.
K33 Research Director Vetle Lunde presented a report indicating that the supply of unspent transaction outputs (UTXO) older than two years has been diminishing since 2024. The research highlights that around 1.6 million BTC, valued at approximately $138 billion at current prices, have re-entered circulation during this timeframe, signaling ongoing on-chain selling activity from early adopters.
Lunde posits that the significant scale of this reduction cannot be attributed to technical factors alone. While he acknowledged that developments such as the transition of the Grayscale Bitcoin Trust to a spot ETF, wallet consolidations, and updates related to security have contributed to some of the early movements, he noted that these elements do not fully explain the volume of supply being reactivated.
The analysis reveals that 2024 and 2025 rank as the second and third highest years in Bitcoin”s history for reactivating long-term supply, with only the year 2017 surpassing these figures. However, Lunde emphasizes that the current cycle exhibits distinct characteristics when compared to 2017, which was marked by altcoin transactions, initial coin offerings (ICOs), and protocol incentives. Today”s trends are primarily driven by direct selling, facilitated by the robust liquidity provided by spot Bitcoin ETFs in the United States and increasing institutional treasury demand.
The report also cites various large transactions that support this trend, including a notable over-the-counter (OTC) sale of 80,000 BTC through Galaxy in July, a whale trading 24,000 BTC for ETH in August, and further sales totaling approximately 11,000 BTC in October and November. K33 notes that similar activities are common among large investors, which could explain Bitcoin”s relatively weak performance in 2025.
In 2023 alone, around $300 billion worth of Bitcoin supply aged one year or more has been reactivated. Lunde observes that as institutional liquidity rises, long-term investors have capitalized on profits at six-figure price points, thereby reducing ownership concentration and establishing new reference prices for a considerable portion of the circulating supply.
Looking ahead, Lunde provides a more tempered outlook. He mentions that about 20% of the Bitcoin supply has returned to circulation over the last two years and predicts that on-chain selling pressure will soon reach saturation. In this context, he forecasts that the two-year trend of declining Bitcoin supply may conclude, potentially surpassing the current level of approximately 12.16 million BTC by the end of 2026. With diminishing sales from early investors, net buying demand could become more prominent.
The report also discusses the effects of portfolio balancing as the end of the quarter nears. Historically, Bitcoin has tended to move inversely to the previous quarter when a new quarter begins. As Bitcoin has lagged behind other asset classes in the fourth quarter, this could prompt portfolio managers with stable allocation goals to consider Bitcoin in late December and early January. Similar trends were noted in late September and early October.
However, Lunde cautions that, in previous cycles, the reactivation of supply has typically been concentrated around market peaks rather than lows. He notes that the current cycle is unique, as Bitcoin becomes increasingly integrated into mainstream finance through ETFs, investment advisory platforms, and more defined regulatory frameworks. This suggests that a more sustained demand could emerge as distribution pressures begin to ease.
