Bitcoin Distribution Slows While Long-Term Base Strengthens

The latest Federal Reserve rate cut landed in a market that had already priced it in. While labour market data continues to soften and inflation pressures remain uneven, what unsettled markets was not the decision itself but the growing perception that monetary policy is becoming increasingly politicized. Even during past economic crises, few administrations have so openly pressured the Fed’s decision-making process.

This shift matters. Bond markets are beginning to reflect a longer-tail risk through higher US rates because confidence in the institutional independence of monetary policy is eroding. Rate cuts are no longer viewed as purely technocratic responses to macro conditions, but as outcomes shaped by political compromise.

Short-term pressure eases 

With event-driven volatility fading, onchain data shows short-term pressure easing after the sharp November spike. Measures of short-term holder stress have reverted toward normalization, indicating that the bulk of reactive selling has already occurred.

Short-term holders’ cost basis is now compressing around the $100,000 psychological level, leaving the spot price within close range of a key inflection point. Echoing the post-trade war unwind, Bitcoin has previously traded below this threshold for extended stretches, marked by choppy, range-bound price action and repeated attempts by leveraged participants to time local tops and bottoms. Structural momentum typically resumes once the price decisively reclaims the short-term cost basis.

Capital flow: distribution to reabsorption

The delta of realized capitalization captures whether capital is entering or exiting the network: positive readings signal net cost-basis expansion, while negative prints reflect seller-dominated conditions.

(Source: Research Bitcoin Lab)

The late-November sell-off reflected a brief phase where profit-taking dominated, and demand failed to absorb supply at higher prices, causing realized capitalization growth to stall and briefly turn negative.

Since then, this dynamic has normalized. Long-term realized profit volatility has mean-reverted below its one-year average, distribution pressure has eased and realized cap deltas have turned positive again, signaling that new capital is once more absorbing supply and rebuilding the market’s cost basis.

Supply walls 

The UTXO Realized Price Distribution (URPD) maps where the existing Bitcoin supply last moved onchain, providing a view of where cost basis, and therefore potential support or resistance, is concentrated.

The data highlights a clear zone of buyer acceptance around $85,000, where the largest volume cluster overlaps with the average ETF cost basis. This confluence marks a key structural level that the market is likely to defend. A sustained break below would risk accelerating selling pressure toward prior cycle highs, making this zone critical for near-term stability.

By contrast, the $70,000–$80,000 range stands out as a low-volume corridor. Bitcoin moved through this area rapidly following the break above prior all-time highs, leaving behind a clear gap in cost-basis formation and reinforcing its role as a volatility pocket rather than a support zone.

(Source: Research Bitcoin Lab)

At the holder level, November saw a sharp acceleration in long-term realized gains, while the Long-Term Holder (LTH) realized price declined. This directional divergence is central to the current setup. Realized gains capture flow (coins being spent) while realized price reflects the remaining stock of long-term supply.

A falling LTH realized price during elevated realized profits means that the coins exiting the cohort carried a higher cost basis than the LTH average. Meanwhile, deeply in-the-money supply remains dormant mainly, improving the resilience of the remaining long-term holder base.

(Source: Research Bitcoin Lab)

In practice, this implies that long-term holders have been selectively distributing higher-cost inventory. Coins acquired at prices above the LTH realized price are being spent and leaving the LTH cohort by definition, mechanically pulling the average cost basis lower.

This pattern aligns closely with ETF-era accumulation as a growing share of ETF-held coins has entered into the long-term holder cohort. Roughly 50% of ETF inflows were acquired between $40,000 and $68,000, well above the current LTH realized price (around $37,000). The decline in LTH realized price, therefore, suggests that a meaningful share of distribution is likely coming from mid-cost ETF-era supply rather than from legacy holders accumulated at much lower levels.