Bitcoin's Holder Dynamics and Institutional Inflows During a Bear Market: A Bottoming Process or Continued Capitulation?

Bitcoin's 2025 bear market has sparked intense debate among investors and analysts. With the price dropping 27% from its October peak of $126,000 to $92,000 as of November 18, the market is grappling with whether this represents a cyclical bottom or a deeper capitulation phase. The transfer of Bitcoin from OG (original) holders to ETFs and new buyers has become a focal point of this discussion. By analyzing on-chain metrics, institutional inflows, and historical patterns, we can determine whether this shift signals a structural rebalancing or a continuation of selling pressure.

Holder Dynamics: From OGs to ETFs and New Buyers

Bitcoin's holder distribution has undergone a significant reallocation since March 2024. OG long-term holders-those holding Bitcoin for over six months-have sold approximately 1.4 million BTC, valued at $121.17 billion at the time of analysis. This selling has been gradual, not panic-driven, and has coincided with a redistribution of supply to U.S. spot Bitcoin ETFs and Bitcoin treasuries. ETFs alone absorbed $78.05 billion of these sales, with assets under management surging from $42.77 billion to $120.82 billion between March 2024 and November 2025. Meanwhile, Bitcoin treasuries across 134 entities added 1.686 million BTC, worth $145 billion.

This shift reflects a maturing market structure. Short-term holders (STHs) are capitulating, with their SOPR (Spent Output Profit Ratio) near zero-a classic indicator of breakeven selling and exhaustion. In contrast, long-term holder SOPR remains modestly above one, suggesting measured profit-taking rather than panic. The redistribution of Bitcoin from OGs to institutional and retail buyers is decentralizing ownership and reducing reliance on early adopters, a positive sign for long-term resilience.

Institutional Inflows: A Structural Tailwind

Institutional demand remains a critical counterweight to retail and OG selling. U.S. spot Bitcoin ETFs have become a primary destination for redistributed supply, with inflows driven by financial advisors and institutions prioritizing Bitcoin's long-term returns. Despite a slowdown in weekly inflows, ETFs like the Fidelity Wise Origin Bitcoin Fund (FBTC) and Grayscale Bitcoin Trust (GBTC) continue to attract capital.

Bitcoin treasuries further underscore institutional confidence. The accumulation of 1.686 million BTC by 134 entities-despite a bearish price environment-highlights structural demand. This trend aligns with broader macroeconomic tailwinds, including global liquidity expansion and central bank easing, which are likely to support Bitcoin's institutional adoption.

On-Chain Indicators: Capitulation vs. Accumulation

On-chain metrics provide clarity on whether the current bear market is nearing a bottom. The MVRV (Market Value to Realized Value) ratio has dropped to 1.8, its lowest level since April 2025. Historically, values below 1 indicate undervaluation and often precede recovery phases. For example, Bitcoin's MVRV hit 3.7 in December 2017 before an 80% correction, but values below 1 have historically signaled bottoms. UTXO age distribution trends also support a bottoming narrative. Long-term UTXOs (over 8 years) have increased to 26.4 million, while short-term buckets (1–3 months) have declined by 38%. This suggests institutional and early adopters are holding for the long term, while retail participants are exiting. The NVT (Network Value to Transactions) ratio, a valuation tool akin to a P/E ratio, is also signaling undervaluation, with a low NVT suggesting the network is underpriced relative to its utility.

However, some caution is warranted. The Value Days Destroyed (VDD) Multiple is rising, and long-term holder supply is falling, indicating OGs are still distributing. A true capitulation phase would require a halt in LTH selling and stabilization above key moving averages like the 350-day. Until then, the market remains in a transitional phase.

Historical Context and Future Outlook

Bitcoin's bear markets are cyclical, with historical data showing an average 6% return over six months and 1% over a year after entering bear territory. The current bear market is the seventh in five years, but the shift toward institutional adoption and ETF-driven demand suggests a more mature market structure. For instance, Bitcoin's price surged 5.72x from its 2024 cycle low to November 2024, and if historical trends hold, it could reach ~$243,000 within a year.

The key differentiator in 2025 is the role of ETFs and treasuries in absorbing selling pressure. Unlike previous cycles, where retail panic often exacerbated declines, institutional buyers are now a stabilizing force. This structural shift, combined with on-chain metrics pointing to undervaluation, suggests the current bear market is nearing a bottom rather than entering a deeper capitulation phase.

Conclusion

The transfer of Bitcoin from OGs to ETFs and new buyers represents a bottoming process rather than continued capitulation. Institutional inflows, on-chain indicators like MVRV and UTXO age distribution, and historical patterns all point to a market recalibration. While short-term volatility persists, the structural demand from ETFs and treasuries, coupled with long-term holder accumulation, provides a strong foundation for a potential bull run. Investors should monitor key on-chain metrics and institutional activity for further confirmation, but the evidence suggests the worst of the bear market may already be behind us.