Bitcoin Wavers as Dormant-Supply and Quantum-Computing Fears Pressure Price
Bitcoin price momentum has slowed as market sentiment shifts toward extreme fear. Traders cite two main supply-side concerns: an estimated 3.5–4 million BTC mined early and considered lost or dormant, and renewed anxiety that advances in quantum computing could expose old addresses that revealed public keys, potentially reintroducing latent supply. Institutional accumulation (ETFs, corporates, funds) of roughly 2.5–3 million BTC since 2020 is comparable in scale to the dormant supply and provides support but has not fully offset the overhang. On-chain data shows a record redistribution this cycle (about 13–14 million BTC moved), easing mining difficulty after prices retreated from near $125,000 and weakening marginal miners. The Crypto Fear & Greed Index sits near extreme fear (around 5), and active addresses and network activity have softened, indicating weaker retail demand. Short-term holders (under five months) are carrying deep unrealized losses, raising near-term capitulation risk, though some analysts see current levels as a long-term accumulation opportunity. Industry experts stress the practical quantum risk is limited—mainly older addresses—and modern wallet standards and potential cryptographic upgrades reduce exposure. Key takeaways for traders: elevated downside sensitivity from theoretical dormant-supply reactivation, meaningful but not decisive institutional accumulation that may set floors, declining retail participation, and on-chain signals of large redistribution without structural network failure.
Bearish
The net effect is bearish for BTC price in the near to medium term. Key factors: (1) Theoretical risk that 3.5–4M BTC could re-enter circulation (via recovered keys or reactivated dormant wallets) increases perceived supply tail risk and heightens downside sensitivity; (2) Significant unrealized losses among short-term holders raise the probability of additional capitulation and forced selling; (3) Softening on-chain activity and low Fear & Greed readings point to weak retail demand, reducing immediate buy-side support; (4) Institutional accumulation (2.5–3M BTC) provides notable demand and may establish a floor, but current accumulation levels roughly match the dormant-supply estimate and have not decisively offset the overhang. In short-term trading, expect higher volatility and asymmetric downside risk until dormant-supply concerns ease or institutions materially expand net holdings. Over the long term, the story is more neutral-to-positive if quantum risk remains theoretical, cryptographic mitigations hold, and institutions continue accumulating — those conditions would gradually reduce supply overhang and support higher prices. For traders: favor risk management, tighter stops, and selective buying on clear on-chain or macro confirmations rather than aggressive long exposure.