On-chain analysis week 32/2026: Bitcoin from an on-chain quantitative perspective.

Analyst Research Team

Group On-chain HCCVenture

Market Summary

Following a sharp correction in Q2, Bitcoin has seen a significant improvement in market sentiment as selling pressure from speculative positions gradually weakened and institutional capital began to return, confirmed by several on-chain and off-chain signals such as ETF inflows shifting to net outflows, continued decrease in BTC deposits to exchanges, and a significant weakening of hedging demand in the options market. However, the recovery has now brought Bitcoin close to the Short-Term Holders' Cost Basis – an area that often acts as a crucial resistance zone during correction cycles.

The price of Bitcoin is now approaching the Short-Term Holder Cost Basis of approximately $69,000 . This is the average cost basis for short-term investors and often serves as a deciding factor between a bear market and a sustainable recovery phase. In previous cycles, successfully breaking through this cost basis has typically led to a significant improvement in market sentiment and new capital inflows, while failure to do so usually results in corrections to absorb additional supply.

Furthermore, the supply structure near the current price level is gradually shifting from resistance to support. Bitcoin, accumulated during the recent correction, is forming a new demand zone below the market price. Compared to the late stages of an uptrend when profitable supply expanded rapidly and money continuously flowed onto exchanges, the current state suggests that distribution pressure remains relatively low.

Historically, strong Bitcoin bull cycles have typically only been confirmed when accumulation activity expands simultaneously across multiple wallet groups, ranging from individual investors to large institutions. Therefore, while long-term capital flows have shown positive signs, the breadth of the accumulation process remains a factor that needs improvement to solidify the uptrend in the medium term.

The macroeconomic environment continues to exert pressure on risky assets. Although US core inflation recorded its first decline in five consecutive months, the Federal Reserve maintains a tight monetary stance as 10-year Treasury yields continue to hover near their 2026 peaks. The US dollar has not shown a clear weakening trend, meaning global liquidity conditions are not yet favorable for a strong Bitcoin valuation expansion cycle.

Analyzing on-chain metrics

Bitcoin has undergone a significant correction after establishing new highs in the current cycle; however, the behavior of long-term investors continues to demonstrate a high degree of patience. Instead of increasing distribution during the price decline, a large portion of the supply continues to be held out of circulation, reflecting the belief that the current valuation is not attractive enough to trigger widespread profit-taking. When analyzing the Bitcoin 1-year Inactive Supply (%) metric, which measures the percentage of BTC supply that has not been moved for at least a year, we identify this as one of the most important measures reflecting the level of supply lock -up on the network.

Current data suggests that approximately 61-62% of the total Bitcoin supply has remained immobile for over a year , a significant increase from the near-bottom 54-55% established during the sharp correction phase of 2025. While still below the historical peak of around 69-70% recorded in 2024, the rate of recovery of this indicator reflects the ongoing re-accumulation process after the market absorbed much of the profit-taking pressure from the previous bull cycle.

Another noteworthy point is that throughout the correction from the peak down below $70,000, the index only declined slightly before quickly recovering. This reflects that selling pressure mainly came from short-term investors, while the majority of long-term holders maintained their holding strategy. This difference suggests that Bitcoin's ownership structure continues to strengthen rather than weaken.

More importantly, the index has not yet returned to its historical peak of around 69-70% , meaning the market still has room for further accumulation if macroeconomic liquidity conditions improve. This differs from the late stages of an uptrend, when the supply of real estate typically peaks before entering a large-scale distribution phase.

Following a sharp correction from the peak of the current cycle, Bitcoin's supply and demand structure continues to shift in a positive direction. While the price remains influenced by profit-taking from short-term investors and volatile institutional capital flows, on-chain data shows that the amount of Bitcoin available for sale continues to shrink, while the group of accumulator addresses maintains a supply absorption rate far exceeding the amount of new Bitcoin created each day.

Current Bitcoin Liquidity Inventory and Demand data from Accumulator Addresses shows that the Liquidity Inventory Ratio has fallen below 100 months , the lowest level since the index was first tracked, and a sharp decline from the over 1 million months recorded during the 2018 market downturn. This sustained downward trend reflects a significantly faster rate of Bitcoin absorption by accumulator addresses compared to the available supply.

Simultaneously, the total sell-side liquidity across all exchanges, including holdings related to GBTC, has decreased from its peak of over 10 million BTC to approximately 8.5-9 million BTC . This is the lowest level in many years, indicating that the amount of Bitcoin available for trading is continuing to be withdrawn from the market.

The simultaneous decline in sell-side liquidity and the record low in liquidity inventory ratio reflect an ongoing supply-demand rebalancing process favoring Bitcoin in the medium and long term. The market is currently witnessing not only a decrease in Bitcoin circulating on exchanges but also a stronger absorption rate by Accumulator Addresses.

Following a surge in transaction activity during the 2023–2025 cycle, the Bitcoin network is entering a more stable phase as the number of pending transactions (Mempool Transactions) has sharply decreased across most transaction fee categories. This data reflects a cooling of short-term network usage demand and also indicates that speculation and competition for blockspace have significantly decreased after the market correction.

The Bitcoin Mempool Transaction Count by Fee Cohort shows that the total number of pending transactions in the Mempool has fallen to its lowest level since the beginning of 2023 , after reaching historical peaks during the boom periods of Ordinals, BRC-20, and Runes. While at one point in 2023 the number of pending transactions exceeded 500,000 , currently the Mempool mostly remains at a few tens of thousands of transactions, reflecting a significant decrease in network usage pressure.

Notably, the decline occurred simultaneously across all three transaction fee groups. Low Fee Transactions , which account for the largest share of the Mempool, have fallen sharply from their historical peaks, while Mid Fee and High Fee Transactions have virtually disappeared from the network for much of the recent period, indicating that users no longer have to compete by paying high fees for priority confirmation, meaning Blockspace is now oversupplied compared to actual demand.

Compared to previous cycles, the period at the end of 2017 and the beginning of 2021 both saw a sharp increase in high-fee transactions as the market entered a state of extreme euphoria. Conversely, currently, although Bitcoin is still trading around $60,000 , the number of high-fee transactions remains very low. This difference reflects that the current correction is not accompanied by panic selling pressure or a speculative surge on the network, but is primarily a rebalancing process after a period of strong growth.

Following a sharp correction since the beginning of 2026, the behavior of whales is showing signs of a notable shift. While much of the selling pressure from the previous cycle has been absorbed by the market, on-chain data indicates that addresses holding large volumes of Bitcoin are gradually increasing their holdings again. This trend reflects an improvement in the confidence of the group of investors who have the greatest influence on the network's supply structure.

Bitcoin Total Whale Holdings shows that the total amount of Bitcoin held by whales has increased from approximately 2.84 million BTC at the end of December 2025 to nearly 3.09 million BTC , equivalent to an increase of about 250,000 BTC , or nearly 9% in just over seven months. This is the strongest recovery since the prolonged distribution period in the second half of 2025, and brings total holdings back to their highest levels since the beginning of the correction cycle.

Compared to previous developments, the amount of Bitcoin held by whales has steadily decreased from approximately 3.24 million BTC to 2.84 million BTC , equivalent to a drop of over 400,000 BTC . This period coincided with Bitcoin establishing a peak in its cycle and witnessed large-scale profit-taking activity from institutional investors and long-term holders. However, since the beginning of 2026, this trend has clearly reversed as the 30-day moving average of holdings began to trend upwards, confirming that a stable re-accumulation process is underway rather than just short-term fluctuations.

Bitcoin Total Whale Holdings ' performance suggests that the whale group has shifted from a distribution to an accumulation phase after the market largely completed its correction. The increase of approximately 250,000 BTC in Bitcoin holdings in a short period reflects a significant improvement in confidence regarding current valuations, and also indicates that the circulating supply continues to be absorbed by investors with a long-term holding tendency.

The BTC Growth Rate Difference (Market Cap vs. Realized Cap) is an effective tool for assessing the relationship between the growth rate of market value (Market Cap) and the growth rate of the actual amount of capital injected into the network (Realized Cap). Unlike Market Cap, which reflects market expectations at the present time, Realized Cap measures market capitalization based on the final price movement of each Bitcoin, thus representing the actual amount of capital absorbed into the ecosystem.

The difference between these two growth rates allows us to determine whether the market is entering a sustainable expansion phase driven by new capital inflows or is simply appreciating faster than the rate of actual capital accumulation. When the index moves into negative territory, the pressure to realize profits typically increases as the rate of increase in Market Cap begins to lag behind Realized Cap. Conversely, when the index remains above neutral, new capital inflows continue to absorb supply and support the expansion of valuations.

The current cycle, although the index remains below zero, shows a negative range of only -0.001 to -0.002 , significantly lower than historical lows, indicating that the current correction is not accompanied by widespread capitulation like previous cycles. Meanwhile, Bitcoin's Realized Cap continues its upward trend and has set a new record high, exceeding $1 trillion , reflecting that real capital continues to flow into the network even as market prices correct.

Drawdown from All-Time High is one of the key indicators reflecting the extent of Bitcoin's decline since the peak of a cycle. Unlike simply observing absolute price movements, drawdown analysis allows for a direct comparison of the intensity and duration of corrections across market cycles, thereby assessing whether the current bearish structure is similar or different from previous bear market phases.

Historical data shows that the 2014-2015 bear market recorded a peak decline of approximately -86% from the cycle peak and took nearly 410 days to form a bottom. The 2018-2019 cycle also saw a correction of about -84% , while the 2022-2023 cycle saw a decline of about -78% , reflecting Bitcoin's familiar characteristic of deep and prolonged downturns following periods of strong growth.

In contrast, the current cycle is distinctly different. After approximately 290 days since setting its historical peak , Bitcoin has only corrected by about 49% , significantly less than previous cycles at the same time point. While historical bear markets have approached the 60-70% drop before the 300th day, the current cycle remains above this threshold with a decline of only about 60-65% of the depth of previous cycles .

Not only is the decline smaller, but the correction period is also significantly shorter. Previous cycles required between 380 and over 420 days to complete the bottoming process. Meanwhile, the current cycle hasn't reached that timeframe yet, but stabilization and recovery are already beginning sooner, reflecting the market's ability to absorb long-term capital flows instead of continuing into a prolonged sell-off phase.

Exchange inflows and outflows are indicators that directly reflect the level of Bitcoin supply turnover in the market. Under normal conditions, the volume of Bitcoin deposited on exchanges typically represents the supply available for sale, while the amount withdrawn from exchanges reflects the demand for long-term storage or transferring assets to other forms of custody. Therefore, simultaneous changes in both capital flows help assess market activity and the equilibrium between buyers and sellers.

Observing data from the beginning of 2023 to the present shows that the average 30-day Exchange Inflow and Exchange Outflow volume has decreased sharply compared to the previous boom period. In 2024, two-way capital flows frequently fluctuated in the range of 40,000–65,000 BTC/day , reflecting high-intensity trading and asset reallocation activities. However, currently, both Bitcoin deposits and withdrawals from exchanges are only around 21,000 BTC/day , equivalent to a decrease of nearly 60–70% compared to the peak period.

Alongside the decline in trading volume, the Exchange Balance continues to hover around 3.30 million BTC , remaining virtually unchanged for several months. After a sharp drop from above 3.45 million BTC in mid-2024 to around 3.20–3.30 million BTC , the amount of Bitcoin on exchanges has now stabilized, indicating that short-term liquidity supply is no longer expanding, while new selling pressure has not yet emerged large enough to significantly increase the amount of Bitcoin held in custody on exchanges.

Compared to previous cycles, the combination of sharply declining trading volume and a sideways-moving Exchange Balance at low levels reflects the market entering a more stable liquidity phase rather than facing large-scale distribution pressure. This structure also aligns with the increasing proportion of Bitcoin held long-term, the amount of Bitcoin that has remained inactive for over a year maintaining historically high levels, and continued accumulation activity observed among large-scale investors.

Aggregate data from major ETFs such as IBIT, FBTC, ARKB, BITB, HODL, BTCO, EZBC, BRRR, and BTCW shows that the strongest net buying activity was concentrated in the $61,000-$72,000/BTC range . This area recorded several consecutive sessions of positive capital inflows ranging from $2-$5 billion , reflecting the large-scale disbursement by institutions immediately after the Spot ETF officially went into operation.

Notably, the $61,000 region is marked as the area with the strongest demand , as net buying volume consistently increased during each correction. This indicates that most institutions have built their average cost of capital around this price level, thereby forming a structural support zone for the entire current cycle. Bitcoin's repeated maintenance above this area during recent corrections reflects the continued stability of ETF supply absorption capacity.

A notable exception occurred around the $95,000 mark , where a massive outflow of capital was recorded, primarily from GBTC following portfolio restructuring. The negative capital inflow at this time exceeded $12 billion , significantly larger than typical fluctuations. However, this was an isolated phenomenon and did not reflect a weakening of the entire ETF group. In fact, most of the capital withdrawn from GBTC was absorbed by new Spot ETFs, particularly IBIT and FBTC, causing the overall system's capital inflow to quickly return to positive territory in subsequent price levels.

Recent data shows that even when Bitcoin traded above $120,000 , ETFs maintained positive net inflows instead of experiencing widespread profit-taking. This reflects the continued confidence of institutional investors in Bitcoin's long-term prospects and indicates that widespread selling pressure from professional investors has not yet materialized.

Assessment and Conclusion

Bitcoin is currently reflecting a capital re-accumulation phase rather than entering its final distribution cycle. Although the market price has corrected significantly from its historical peak, indicators reflecting real capital flows such as Realized Cap , Realized Price , 1-Year Inactive Supply ratio , holdings by accumulator addresses, and activity of large-scale investor groups all continue to show an improving trend.

From a supply-demand perspective, the market is forming an increasingly tight structure. Liquidity supply on exchanges remains near multi-year lows, the volume of Bitcoin transferred to exchanges continues to decline, while institutional accumulation and Bitcoin ETF spot funds continue to absorb large amounts of circulating supply. Simultaneously, the proportion of Bitcoin that hasn't been traded for over a year remains at historically high levels, reflecting that much of the supply has shifted to investors with low sensitivity to short-term price fluctuations. This shift significantly reduces the amount of Bitcoin available for trading on the market, thereby creating an increasingly scarce supply base.

The difference between Market Cap and Realized Cap remains healthy, MVRV has not entered overvalued territory, while the drawdown of the current cycle is only around 49% , significantly lower than previous bear markets. This reflects that the current correction is not accompanied by large-scale capitulation, but rather has the characteristics of a technical correction cycle in the context of continued long-term capital flows.

More importantly, the convergence of continuously rising Realized Cap , shrinking liquidity supply , increasing long-term holdings , expanding whale accumulation activity , and sustained net buying by ETFs is creating a market structure of significantly higher quality than in previous cycles. This reflects Bitcoin's shift from an asset primarily dominated by speculative capital to one increasingly accumulated by institutional investors and long-term capital flows.

Disclaimer

This report was prepared by HCCVenture Research with the aim of providing information, research, and market analysis. The entire content of the report is based on publicly available data, on-chain data, market data, venture capital (Venture Capital) data, macroeconomic data, and HCCVenture's internal research methodologies at the time of publication. Data sources are compiled from numerous reputable research platforms and organizations, including but not limited to Glassnode, CoinGecko, TradingView, Dune Analytics, CoinGlass, CryptoRank, RootData, PitchBook, DefiLlama, CryptoQuant, Messari, Token Terminal, Artemis, CoinMarketCap , public blockchain data, reports from financial institutions, investment funds, blockchain companies, and other publicly available information sources. HCCVenture strives to select reliable data sources and applies a verification and cross-checking process throughout its research. However, HCCVenture does not guarantee the completeness, accuracy, timeliness, or error-free nature of all data due to differences in statistical methods, data collection scope, update times, or adjustments from data providers.

All opinions, assessments, valuation models, cyclical analysis, on-chain data, capital flow analysis, Venture Capital activity, ETFs, Digital Asset Treasury Companies (DATs), technical indicators, macroeconomic indicators, and scenarios presented in this report reflect only the research views of HCCVenture Research at the time of publication, based on available assumptions and data. These contents are not investment advice, financial advice, legal advice, accounting advice, tax advice, brokerage advice, portfolio management advice, or recommendations to buy, sell, or hold any digital asset, security, financial product, investment fund, blockchain protocol, or business. The digital asset and blockchain markets are highly volatile and are influenced by global liquidity, monetary policy, regulatory regulations, macroeconomic conditions, and many other unpredictable factors. Therefore, the trends, patterns, correlations, or historical cycles mentioned in this report are not guaranteed to repeat in the future and should not be considered reliable predictions of market developments. Readers should conduct their own independent research ( DYOR – Do Your Own Research ) and consult with qualified financial, legal, tax, or investment professionals before making any decisions. Any investment decisions or actions arising from the use of information in this report are the sole responsibility of the reader.

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