Lihua 丽华

Bitcoin’s recent sluggish price action isn’t just about short-term sentiment — a deeper supply narrative is quietly shaping market psychology.

A significant portion of BTC mined in the early years, estimated around 3.5–4 million coins, is widely considered lost or permanently dormant. That’s close to one-fifth of Bitcoin’s total supply. For years, markets treated these coins as effectively removed from circulation.

But the conversation is shifting.

With rapid progress in quantum computing, older wallets — particularly those with previously exposed public keys — are being revisited as a potential long-term vulnerability. Even if the risk remains theoretical, markets don’t wait for certainty. They price expectations.

Now place that beside institutional accumulation.

Since 2020, ETFs, corporates, and large funds have collectively absorbed roughly 2.5–3 million BTC — a figure surprisingly close to the amount believed to be lost. This overlap creates an interesting dynamic: if even a fraction of dormant coins were to re-enter circulation someday, forward supply assumptions change, and price models adjust accordingly.

However, context matters.

On-chain data shows 13–14 million BTC have already rotated during this cycle, marking one of the largest redistributions in Bitcoin’s history. Despite that enormous sell-side liquidity, the market avoided a structural collapse — suggesting absorption capacity is stronger than many assume.

There’s also a key technical nuance:
quantum risk primarily targets a subset of older wallets, not the Bitcoin network as a whole. Meanwhile, wallet standards continue to evolve, security practices improve, and research into quantum-resistant cryptography is actively progressing.

In reality, the market is weighing two competing narratives:

• A theoretical future supply overhang from dormant coins
• A continuously strengthening network with growing institutional demand

This tension may partly explain why Bitcoin has moved sideways despite supportive macro liquidity and sustained institutional interest.