BTC Struggles as Dormant Supply and Quantum Fears Stir Market

Bitcoin sentiment hits extreme fear as dormant supply concerns, quantum debate, and weak retail demand pressure price.

Bitcoin entered 2025 with strong momentum and record optimism. However, early gains have faded, and traders are no longer chasing highs. Questions about long-dormant coins and future tech risks are resurfacing, even while institutional holdings remain firm. Because of that shift in focus, price now struggles to reflect the strength seen just months ago.

Early-Mined BTC Back in Focus as Pricing Models Face Pressure

Since the beginning of this year, the market mood has shifted to caution. What looked like a strong bull phase now appears to be a reset in expectations. Crypto analyst Ash Crypto noted that since Q4 2025, BTC has underperformed every major asset class.

The analyst linked weakness to rising concerns about quantum computing and dormant coins. Roughly 3.5 to 4 million BTC mined in the early years are considered lost or permanently inactive. That figure represents nearly 18% of the total supply.

Debate has returned around older wallets, especially those with exposed public keys. Rapid advances in quantum computing have revived fears that some dormant coins could one day become accessible. Even a small chance of reactivation affects forward supply assumptions.

Moreover, institutional accumulation adds another layer to supply dynamics. Since 2020, ETFs, corporations, and large funds have acquired roughly 2.5 to 3 million BTC combined. Institutional absorption now stands in a similar range as coins assumed permanently lost.

Such balance creates tension in pricing models. If markets believe part of the dormant supply could re-enter circulation, they discount that risk in advance. Anticipation alone can push prices without a single coin moving.

Recent blockchain data provides an added perspective. Roughly 13 to 14 million BTC have moved during the current market cycle, marking the largest redistribution on record. Despite strong selling pressure, Bitcoin did not suffer a major structural breakdown.

Given how much supply has already been absorbed, a potential 3 to 4 million BTC overhang may be overstated.

Bitcoin Sentiment Hits Extreme Fear as Quantum Concerns Resurface

Fears around quantum computing often sound larger than the actual risk. In reality, potential exposure mainly concerns very old Bitcoin addresses that revealed their public keys years ago. Most modern wallets use updated standards that reduce that vulnerability.

At the same time, developers are already working on quantum-resistant cryptography. Wallet design and security practices have improved over the years. Because of that, Bitcoin is not frozen in its early form. The network can adapt if real threats emerge.

The market now weighs between two theoretical ideas. Some fear that lost or dormant coins could return and increase supply one day. Others point out that Bitcoin’s network adjusts over time and remains stable.

As such, price has struggled even though institutions are still involved and global liquidity remains supportive. On the other hand, market sentiment has turned sharply negative. The Crypto Fear and Greed Index fell to 5 on February 12, a level that signals extreme fear. Confidence seen in October has disappeared, with only a short bounce around New Year.

Fear-driven selling in recent weeks has replaced the optimism that once supported the rally. Further, mining difficulty fell after the BTC price declined from $125,000. Lower prices forced weaker miners out of the market. 

In response, the protocol eased the difficulty, allowing remaining operators to remain profitable. This self-correcting mechanism helps remaining miners stay profitable and keeps the network stable during price declines.

However, user activity sends a more concerning signal as active Bitcoin addresses experienced volatility. Fewer active users suggest weaker retail interest. Consequently, organic demand at current levels appears limited.