Long-term Bitcoin distribution likely nearing exhaustion as two-year supply set to rebuild into 2026

Bitcoin’s late-cycle friction has centered on one group: long-term holders distributing into strength. The latest read is that this wave is close to running its course, with a turn expected in 2026 as the two-year coin supply begins to rebuild alongside a return of net buy-side demand. That framing matters because it shifts the narrative from “who is selling now” to “who won’t be selling later.”

The signal worth watching is the two-year supply cohort—the share of BTC that has remained unmoved on-chain for 24 months or more. When that bucket shrinks, it usually reflects experienced holders realizing gains into rallies. When it bottoms and starts rising, it implies sell-side pressure from early entrants has waned and coins are aging back into illiquidity. K33 sees that inflection ahead, with early holder selling easing in 2026 and the two-year supply recovering as demand outpaces distribution.

Why this phase often ends the same way: - Incentives change. As a rally matures, the marginal long-term holder becomes less willing to part with scarce coins at small incremental premiums. The easy supply gets cleared; the rest grows sticky. - On-chain verification matters. UTXO age bands and spent volume data make this behavior visible in near real-time. When high-aged supply stops bleeding and young coin issuance slows, inventory tightness tends to follow. - Market psychology normalizes. Once the “sell the bounce” muscle memory fades, buyers stop being met by constant supply overhang, letting price discovery work with less resistance.

The business implications are straightforward. Desk flow and ETF creations can absorb episodic distribution, but structural rallies need sellers to step back. A recovering two-year supply signals a re-accumulation regime: miners manage fewer coins post-halving, treasuries and ETFs add on dips, and derivatives basis tightens as spot demand leads. In that setup, volatility can compress before the next trend leg because liquidity improves while net supply to market declines.

My lens for 2026: - If two-year supply turns up while realized profit-taking subsides, the market likely transitions from distribution to dormancy—an environment where pullbacks get shallower and duration matters more than magnitude. - Net buy-side demand can come from multiple channels—spot ETFs, corporate treasuries, or cross-asset reallocations when macro liquidity loosens. You don’t need a single dominant buyer if aggregate flows keep cresting above miner and holder supply. - Pricing tends to lag the on-chain tell. The two-year supply recovery can lead the narrative by weeks or months because it reflects decisions already made by the most patient cohort.

Risks that could delay the inflection: - A macro shock that resets risk budgets and forces renewed distribution. - Policy surprises that dent US spot ETF inflows or restrict banking rails, pushing activity offshore and raising friction. - A leverage cycle that outruns spot demand, creating forced sellers in derivatives even as holder sell pressure eases.

How I’d track this: - Two-year supply share and dormancy metrics to confirm coins are aging again. - Spent Output Age Bands to ensure older cohorts are no longer the marginal sellers. - Net ETF flows and custody balances as a proxy for persistent spot demand. - Miner to exchange flows to verify that post-halving issuance isn’t compensating for reduced holder distribution.

The takeaway is not that supply shocks guarantee straight lines up. It’s that the constraint often moves from “too much legacy supply” to “too little willing supply,” and price behavior reflects that regime shift with time. If K33’s timeline holds, 2026 looks like the year the market stops negotiating with the past and starts compounding the next base. In Bitcoin, patience usually shows up on-chain before it shows up on price charts.