Analysis: BTC’s 2025 High-Cost Supply Has Fallen 41.5%, Suggesting Peak Market Supply Pressure May Be Easing

Bitcoin’s current market structure is being shaped by a familiar but important on-chain dynamic: coins bought near local highs are gradually moving from weaker hands to more patient holders. According to on-chain analyst Murphy, the cohort of BTC acquired in 2025 has declined sharply from its peak, with the remaining amount now estimated at roughly 4.77 million BTC, down about 41.5% from the high recorded last December.

Because most 2025 Bitcoin buyers are still underwater at current prices, a reduction in this cohort is unlikely to be purely neutral. Aside from wallet migrations or internal transfers, it may indicate that some holders have sold at a loss, allowing high-cost supply to be absorbed by the broader market.

This matters because high-cost BTC supply is often one of the largest sources of potential sell pressure during late-stage corrections. If that supply continues to shrink, Bitcoin may be moving closer to a phase where forced selling weakens and long-term holders regain more influence over market direction.

Why the 2025 BTC Cohort Matters

In on-chain analysis, the price at which coins last moved can help estimate whether holders are in profit or loss. When a large amount of Bitcoin was last acquired at elevated prices, that supply can become a potential overhang: if price rebounds toward those holders’ cost basis, some may sell to break even; if price falls further, others may capitulate.

The 2025 BTC cohort appears especially important for three reasons:

1. It represents recent high-cost buyers
   These holders entered the market during a period of higher valuations, meaning their cost basis is likely above the current spot price.

2. Its size is still meaningful
   Even after a 41.5% decline, an estimated 4.77 million BTC remains in this group, making it a large potential source of supply.

3. Its behavior may define the next phase of the cycle
   If the cohort keeps shrinking, the market may be transferring coins from short-term, loss-sensitive participants to stronger hands.

This type of analysis is closely related to concepts such as realized price, supply in profit or loss, and holder behavior. For readers who want to understand the methodology behind these indicators, Glassnode’s educational materials on realized capitalization provide a useful starting point.

Two Stages of Supply Reduction

Murphy’s data suggests that the decline in 2025-acquired BTC has not been linear. Instead, it can be divided into two broad stages.

Stage One: Rapid Reduction Before February

The first phase saw a fast decline in the amount of BTC attributed to 2025 buyers. This likely reflected early capitulation, stop-loss selling, and portfolio de-risking by participants who entered close to the top.

In market terms, this stage often corresponds to emotional selling. When prices fall sharply after a strong rally, newer buyers are more likely to exit, especially if they purchased with leverage, short time horizons, or expectations of immediate upside.

Stage Two: Slower but Persistent Decline After February

After February, the pace of decline slowed. However, the curve continued to slope downward, implying that high-cost supply was still being released, just at a more measured rate.

This is an important distinction. A slower decline does not necessarily mean selling pressure has disappeared. It may instead indicate that the most reactive sellers have already exited, while remaining holders are more selective about when to sell.

For Bitcoin, this gradual transition is often part of a broader market healing process. Panic selling fades first; structural supply absorption takes longer.

Historical Cycles: How Much High-Cost Supply Usually Clears?

Bitcoin’s previous bear-market bottoms offer useful context. Murphy compared the current drawdown in 2025-acquired BTC with similar high-cost cohorts from earlier cycles:

• Around the 2022 bear-market bottom, the BTC bought near the 2021 highs had reportedly declined by roughly 51%.
• Around the 2018 bear-market bottom, the BTC accumulated near the 2017 highs had reportedly fallen by around 62%.

If this cycle follows a similar pattern, a 50% to 60% reduction in the 2025 high-cost cohort could be a reasonable reference range. With the current decline at about 41.5%, the implication is that some supply release may still be ahead.

However, cycle analogies should be used carefully. Bitcoin’s market structure has changed dramatically since 2018 and even since 2022. The current cycle includes stronger institutional participation, spot ETF flows, public-company treasury strategies, and deeper derivatives liquidity. These factors can alter how supply moves, how quickly capitulation occurs, and how much BTC is actually available for sale.

The ETF and Corporate Treasury Factor

One major reason this cycle may differ from previous ones is the rise of institutional Bitcoin demand.

In January 2024, the U.S. Securities and Exchange Commission approved spot Bitcoin exchange-traded products, opening a more accessible channel for traditional investors to gain BTC exposure through regulated market infrastructure. The approval marked a major shift in Bitcoin’s investor base and liquidity profile, as noted in the SEC’s statement on spot Bitcoin exchange-traded products.

In addition, companies such as Strategy have continued to hold Bitcoin as a treasury asset, with its BTC position disclosed through corporate filings and investor materials. Public-company holdings can be tracked through sources such as Strategy’s Bitcoin treasury page.

This matters because ETF custodial holdings and corporate treasury BTC may be less sensitive to short-term market volatility than retail-held coins. If a portion of the 2025 cohort belongs to institutions with long-term mandates, the actual liquid supply pressure may be lower than the raw on-chain figure suggests.

In other words, not every high-cost coin is equally likely to be sold.

What This Means for Bitcoin Market Structure

The key question is not simply whether high-cost supply has declined. The more important question is whether the remaining holders are likely to keep selling.

A 41.5% reduction suggests that a substantial portion of 2025 buyers have already exited or redistributed their coins. That can be constructive because it reduces the number of underwater holders who may sell into rebounds.

At the same time, the remaining 4.77 million BTC is still large enough to influence market behavior. If Bitcoin revisits key resistance zones, some holders may use the opportunity to reduce exposure. If price weakens further, another wave of loss realization could occur.

From a market-cycle perspective, the current setup points to a transition zone rather than a confirmed resolution. Selling pressure appears to be easing, but it may not be fully exhausted.

Key Signals to Watch Next

For investors and long-term Bitcoin holders, several indicators may help clarify whether the supply overhang is truly fading:

1. Continued Decline in High-Cost Supply

If the 2025 cohort keeps shrinking toward the historical 50% to 60% range, it may indicate further capitulation or redistribution. A flattening curve, however, could suggest that remaining holders are becoming more resilient.

2. Long-Term Holder Behavior

When older BTC supply stops declining and begins to rise, it often signals renewed accumulation. Long-term holder conviction is one of the most important structural supports in Bitcoin cycles.

3. ETF Net Flows

Spot Bitcoin ETF inflows can absorb sell-side pressure, while sustained outflows can amplify weakness. ETF flow data should be read together with on-chain metrics rather than in isolation.

4. Realized Losses

If realized losses spike and then fall sharply, it may indicate that capitulation has peaked. A persistent but declining loss trend often appears during bottom-building phases.

5. Exchange Balances

A fall in BTC held on exchanges can suggest reduced immediate selling availability. However, exchange balance data should be interpreted carefully because institutional custody and internal wallet reorganizations can distort short-term readings.

A More Nuanced View: Less Pressure Does Not Mean No Risk

The decline in 2025 high-cost BTC supply is a constructive signal, but it should not be treated as a standalone bottom indicator. Bitcoin markets are influenced by liquidity conditions, macro policy, ETF demand, miner behavior, derivatives positioning, and investor psychology.

For example, global interest-rate expectations and U.S. dollar liquidity remain relevant to crypto risk assets. Meanwhile, Bitcoin’s post-halving supply dynamics continue to shape miner revenue and market narratives. Readers can refer to the official Bitcoin overview for foundational context on issuance and network design.

The better interpretation is this: one of the largest potential sources of market supply may be gradually weakening. That does not guarantee immediate upside, but it improves the structural backdrop if demand stabilizes or increases.

Security Reminder: Market Cycles Change, Private Key Risk Does Not

Periods of market stress often lead investors to make rushed decisions: moving assets between platforms, chasing liquidity, or reacting emotionally to price swings. Regardless of market direction, self-custody remains a core principle for Bitcoin holders who want direct control over their assets.

A hardware wallet like OneKey can help users keep private keys offline while managing BTC and other crypto assets through a security-focused self-custody setup. For long-term holders, reducing exchange exposure and maintaining proper backup practices can be just as important as understanding on-chain supply trends.

Conclusion

The 41.5% decline in BTC acquired during the 2025 high-price phase suggests that a meaningful amount of underwater supply has already been cleared. Historical comparisons imply that the process may not be complete, with prior cycle bottoms seeing high-cost cohorts fall by roughly 50% to 60%.

Still, this cycle is different. Spot Bitcoin ETFs, corporate treasury holdings, and institutional custody may reduce the amount of BTC that is truly available for sale, even if on-chain cost-basis data shows a large remaining cohort.

For now, the market appears to be in a late-stage redistribution phase: weaker hands have been reduced, long-term holder sell pressure is softening, and the biggest remaining question is whether demand can absorb the rest of the high-cost supply. For Bitcoin investors, the signal is worth watching closely, but it should be combined with broader market, liquidity, and security considerations.