Bitcoin’s shrinking supply meets rising profits – But where is the demand?

Bitcoin’s [BTC] price action remains uncertain, with the asset locked in a range-bound structure for weeks, trading between $68,000 and $70,000 without a decisive breakout in either direction.

Amid this indecision, fresh on-chain data and liquidity trends suggest that buyers may be attempting to regain control. If sustained, this shift could shape Bitcoin’s short-term trajectory.

Active Bitcoin supply declines

Active Bitcoin supply has fallen over the last 30 days, signaling reduced transaction activity across the network. This contraction carries several implications for the broader market.

Under current conditions, the decline suggests fewer coins are changing hands, contributing to subdued volatility.

Lower activity typically reflects caution among participants, particularly in an environment where conviction remains fragile.

Source: Alphractal

Recent liquidation data reinforces this view. Over the past few days, total liquidations have amounted to roughly $132 million—a relatively modest figure compared to periods of heightened volatility.

Liquidations often spike during sharp price swings, so the muted figure underscores the current market calm.

This trend also indicates that traders are less willing to assume additional risk. Instead, many prefer to hold their assets for longer durations.

Holding reduces circulating supply, which can be constructive, particularly at a time when demand appears weak and broader sentiment remains cautious.

Demand shows signs of exhaustion

Spot exchange netflow—a key indicator used to track inflows and outflows of assets from exchanges—points to thinning demand.

Data from CoinGlass shows that total Spot accumulation over the past 72 hours reached just $238.11 million in net buys.

Notably, the 1st of March accounted for more than half of that figure, with $145.22 million in net purchases. Even then, the overall scale remains limited. Today alone, roughly $55.62 million flowed into Bitcoin.

Such demand levels are insufficient to trigger a decisive price move. While a segment of investors maintains a bullish outlook, the broader market appears sidelined and cautious.

Source: CryptoQuant

Interestingly, most of the recent purchases have come from whales—large holders with substantial capital at their disposal. Despite their participation, price action has remained largely muted.

Spot average order size data supports this observation, showing that both large and smaller whales have dominated trading activity for more than eight consecutive weeks.

Yet, their accumulation has not translated into a meaningful breakout, underscoring the lack of broader market participation.

Sell pressure remains contained

One constructive development is the steady increase in the number of Bitcoin addresses in profit.

Data from CryptoQuant’s UTXO (unspent transaction output) in profit metric shows a growing share of holders sitting on unrealized gains. Typically, rising profitability can incentivize selling, adding pressure to price.

However, active addresses have declined, suggesting that many of these profitable holders are not rushing to exit. Instead, they appear content to hold.

At the time of writing, the number of UTXOs in profit stood at approximately 246 million.

Source: CryptoQuant

If this upward trend continues without a corresponding surge in selling activity, Bitcoin could attempt a break above the $70,000 threshold. Still, sustained upside will require stronger Spot market demand.

Without it, any breakout risks fading, leaving Bitcoin confined within its current range.

Final Summary

• Active Bitcoin supply has declined over the past 30 days as investors pull back from transacting.
• Demand has fallen to a notable low, even as the number of investors in profit continues to rise.