Bitcoin is currently experiencing a profound and strategic recalibration of its supply dynamics. This isn't merely a market fluctuation but a fundamental structural shift indicating robust underlying demand and network expansion, setting the stage for its next growth phase.
Bitcoin's Supply Undergoing a Major Rotation
A significant mid-cycle supply rotation is underway in the Bitcoin network. Long-Term Holder (LTH) supply has decreased to a monthly low, indicating that long-dormant coins are reactivating at scale. Conversely, Short-Term Holder (STH) supply has seen a notable increase, climbing to 2.4 million BTC and reflecting a 7.96% uptick in a short period. This rotation coincides with Bitcoin's price reaching new all-time highs, suggesting a healthy absorption of this newly available supply. Further reinforcing this trend, Bitcoin's new address momentum is ticking higher, with the 30-day Simple Moving Average of new addresses surpassing its 365-day counterpart. This crossover is a classic signal of renewed on-chain expansion, demonstrating that the rate of new user onboarding is now outpacing yearly trends and indicating strong confidence from retail and newer market entrants.
Reawakening of Dormant Capital
Adding to this dynamic shift, CryptoQuant data confirms a substantial reawakening of dormant Bitcoin supply. While only about 59,000 BTC from long-dormant wallets moved in 2023, that figure surged to 255,000 BTC in 2024, with 2025 already seeing 214,000 BTC reactivated within just a few months. Crucially, the average transaction size for these movements has dramatically ballooned from 162 BTC to 1,011 BTC. This significant increase in average transaction size suggests these are not typical retail flows but likely reflect high-conviction entities rotating substantial supply back into active circulation. Despite this increased supply-side activity, Bitcoin has continued to rally, underscoring the immense underlying demand absorbing these reactivated coins. In essence, Bitcoin's supply map is being redrawn in real-time as dormant capital reactivates, short-term holders gain market share, and network growth accelerates. These indicators collectively point not to late-cycle euphoria, but rather to a robust mid-cycle structural reset, positioning Bitcoin for its subsequent major rally.
