On-Chain Fundamentals for Humans | Part 7

Adler Education Issue #15

Supply Dynamics: Who Holds the Supply

SERIES CONTEXT

Series: “On-Chain Fundamentals for Humans”
Part: 7 of 9

Series Roadmap:

• Part 1: On-chain 101 - blockchain measurement basics. What are UTXOs, realized cap, cohorts, and why this data is relevant for understanding the market

• Part 2: Realized Price - how to read realized price (aggregate and by cohort) as support/resistance

• Part 3: SOPR - profit/loss as a regime switch. SOPR vs aSOPR, how to interpret “flushes” and “re-accumulation”

• Part 4: STH vs LTH cost basis - who is currently underwater. % Supply in Profit/Loss, sell pressure from underwater holders

• Part 5: MVRV - overheating/undervaluation without guesswork

• Part 6: NUPL - sentiment through network profitability

• Part 7 (current): Supply dynamics - who holds the supply

• Part 8: Flows - exchange inflow/outflow without myths

• Part 9: How to combine signals - integration of all metrics

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1. CONNECTION TO PREVIOUS PARTS

Methodological Note:

This lesson uses CryptoQuant data for STH/LTH supply and HODL Waves. All values are given as daily close unless otherwise noted. Historical extremes may vary depending on the data source.

In the first six parts, we built a comprehensive profitability and sentiment analysis system:

Part 1 gave us the basic language - UTXO, Realized Cap, cohorts.

Part 2 turned Realized Cap into a practical tool - Realized Price as a key support/resistance level.

Part 3 added sales dynamics - SOPR shows whether coins are sold at a profit or loss at the moment of transaction.

Part 4 expanded the picture to the entire supply - % Supply in Profit shows the state of coins that are NOT moving.

Part 5 introduced MVRV - a ratio that compares market valuation with the aggregated cost basis of all participants.

Part 6 transformed MVRV into NUPL - a sentiment gauge that shows the percentage split between network profit and loss.

But here’s the question that remains:

We know how much profit exists in the network (Part 6). We know how much supply is profitable (Part 4). But who holds this supply? How is it distributed across different holder cohorts? How does ownership structure change through cycles?

Part 7 answers this question: Supply dynamics shows the distribution of Bitcoin ownership across time-based cohorts and how this structure evolves through market cycles.

Key Insight Connecting Part 6 → Part 7:

Part 6 (NUPL) shows what percentage of market cap is unrealized profit. Part 7 (Supply Dynamics) shows who holds that supply and for how long.

This is the difference between:

• Profitability (Part 6) - 60% of market cap is unrealized profit

• Ownership (Part 7) - 75% of supply is held by long-term holders

What You’ll Get After This Lesson:

• Understanding HODL Waves as a visualization of supply age distribution

• STH vs LTH supply split and what it means for market structure

• How supply distribution changes through bull/bear cycles

• The concept of “strong hands” vs “weak hands”

• Historical patterns of distribution and accumulation

• Practical framework for using supply dynamics in decision-making

• Integration with Parts 2-6 for the complete picture

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2. BASICS: WHAT IS SUPPLY DISTRIBUTION

2.1 The Two Core Metrics

Supply dynamics is measured through two primary frameworks:

1. STH vs LTH Supply Split