Bitcoin Supply Imbalance Suggests More Downside Before Recovery, Analysts Say

Bitcoin [BTC] has been on a bearish trend since October 2025. Since its all-time high of $126K, BTC has shed 46% of its value in just under six months. That it has been a bear market is under no doubt anymore.

What was in contention, however, was the extent of the distribution phase. In fact, crypto analyst Axel Adler Jr. recently found that large and mid-sized Bitcoin investors still hold around 68% of the BTC supply.

The short-term holder drawdown has been high, and any price bounce is likely to be met by aggressive profit-taking and exiting at breakeven. This has already happened once, with the rejection from the $76K resistance.

Cohorts whose balances ranged from 100 to 10K BTC were categorised by size. Their share of the supply holdings came to 68%, while small participants holding 10 BTC or fewer had only 17% of the supply.

Distribution from large and mid-sized investors and a rebalance in Bitcoin holdings among cohorts lower down the scale are needed to trigger a structural change. This would point towards a broader distribution and a capitulation regime.

Another factor that pointed towards a deeper reset was the UTXO Profit Count Percent. The metric measures the number of individual unspent transaction outputs (UTXOs) that are worth more today than at the value they were last moved.

The 30-day and 365-day moving averages of this metric were at 69.1% and 87.5%, respectively. This underlined weakness, but not a full market reset. For context, the previous cycle’s 1-year moving average hit 55.7%.

In May 2019, the metric’s yearly average declined to 63.8%, both of which were quite far from 87.5%. There is stress in the market right now. And, by the 365-day moving averages’ standards, there may be more room for a full structural reset.

Founder and CEO of crypto intelligence platform, Joao Wedson, used post-halving bull market durations and the historical bottoms to estimate the current cycle’s bottom.

The chart showed that the bottom could come 912-922 days from the most recent halving event. This puts the estimated cycle bottom at late September- early October 2026.

• Large and mid-sized investors hold 68% of the Bitcoin supply, meaning a broader capitulation can be expected in the next six months.
• Based on previous cycles, the current bear market bottom could come around October 2026.