Bitcoin is starting to flash signals that usually appear around major turning points in its market cycles—but those same signals also suggest that a definitive bottom may still be ahead, according to on-chain analysts.
Several key blockchain-based valuation metrics, tracked by research firm CryptoQuant, show that the market is caught in a grey zone: no longer in the euphoric highs of a bull peak, but not yet in the kind of deep capitulation that has historically marked durable bear market lows.
On-chain metrics in “no man’s land”
Analysts point to a set of well-watched indicators—Long-Term Holder (LTH) capitulation, Market Value to Realized Value (MVRV), Net Unrealized Profit/Loss (NUPL), and the share of Bitcoin’s supply currently in profit.
Right now, all of these sit between what’s typical for a mid-cycle correction and what has historically appeared near the bottom of a full-blown bear market. In other words, the data is signaling stress and cooling optimism, but not the panic and forced selling usually seen at cycle lows.
Historically, clean cycle bottoms have tended to align with moments when long-term holders—the cohort that usually resists volatility and sells last—are sitting on heavy losses.
CryptoQuant’s latest report notes that in past bear markets, long-term holders typically suffered loss margins of around 30% to 40% before a durable bottom could form. Those deep drawdowns tend to reflect exhaustion across even the most committed investors, flushing out weak hands and resetting the market.
Long-term holder profits have nearly evaporated
Long-term holder profitability has already deteriorated sharply.
In October, this group—commonly defined as addresses that have held coins for more than 155 days—was sitting on average unrealized gains of around 142%. Since then, that margin has been eroded down to roughly breakeven levels as prices retreated.
This steep compression in profits is one of the clearest signs that the cycle has moved past its euphoric phase. However, the current state is closer to neutral than to outright capitulation. Many long-term holders are not yet deeply underwater in aggregate, which suggests that selling pressure driven by despair or forced liquidations has not fully played out.
MVRV: Valuation still above classic bottom range
The MVRV ratio compares Bitcoin’s current market price to its “realized price”—effectively the average on-chain cost basis at which all coins last moved. When MVRV is high, the market is heavily in profit and often vulnerable to sharp corrections. When it plunges below 1.0, it means the average investor is at a loss, a zone that has historically aligned with strong accumulation opportunities.
At present, MVRV has cooled significantly from the overheated levels seen near recent highs, but it has not fallen into the deep-value territory observed during major bottoms in 2015, 2018, or March 2020. Instead, the ratio sits in a middle band that often corresponds to consolidation or mid-cycle retracements rather than absolute lows.
This intermediate reading reinforces the idea that while speculative excess has been drained from the market, the repricing process may not be complete.
NUPL and supply in profit: Sentiment has cooled, but not broken
NUPL (Net Unrealized Profit/Loss) measures the difference between the total unrealized profit and loss in the network. When NUPL is high, investors are sitting on large paper gains; when it flips deeply negative, most holders are underwater, reflecting capitulation and fear.
Similarly, the percentage of supply in profit shows what share of existing coins would be sold at a gain if moved at today’s prices. During severe bear markets, that share can fall dramatically, indicating that most participants are trapped in losing positions.
Currently, both NUPL and the percentage of supply in profit are off their frothy highs but remain far from the extreme pain zones that have previously marked cycle lows. Sentiment has clearly cooled, and a substantial chunk of speculative profit has been wiped out—but the market has not yet flipped into full-fledged distress.
Inflation and macro risks keep pressure on crypto
Overlaying this on-chain picture is a still-uncertain macroeconomic environment. Concerns about sticky inflation, shifting expectations around interest rate cuts, and broader risk-off moves in traditional markets continue to weigh on digital assets.
Higher-for-longer interest rates make speculative assets like Bitcoin less attractive compared to safer yield-bearing instruments. Each time inflation data or central bank commentary undermines the case for imminent monetary easing, risk assets—including cryptocurrencies—tend to come under renewed pressure.
This macro backdrop helps explain why Bitcoin has struggled to sustain rallies even as some on-chain metrics suggest that speculative excess has moderated. The market may be caught between improving structural fundamentals (institutional participation, new financial products, long-term adoption) and a macro headwind that limits immediate upside.
Why this doesn’t look like past cycle bottoms—yet
Comparing the current landscape with prior major bottoms reveals several important differences:
1. Depth of losses among long-term holders
In prior major lows, long-term holders collectively sat on substantial unrealized losses. Today, aggregate LTH positioning is closer to flat than deeply negative, hinting that true capitulation—where even strong hands panic or are forced to sell—might still lie ahead if macro or market conditions deteriorate.
2. Valuation relative to realized price
In previous cycles, pronounced bottoms saw MVRV dip into a region where Bitcoin traded below the average on-chain cost basis. That sustained “discount” often coincided with long accumulation periods. Currently, Bitcoin remains above these historically depressed valuation levels.
3. Market behavior and volatility
Classic bottoms have often come with extreme volatility spikes, sharp intraday wicks, and very high trading volumes as capitulation plays out. While recent corrections have been sharp at times, the pattern so far looks more like structured profit-taking and risk reduction than outright panic.
4. Duration of the drawdown
Many historical bottoms took months of grinding sideways or lower prices, with sentiment shifting from denial to apathy before recovery. The current corrective phase, while painful for late entrants, has not yet followed that extended pattern of resignation and boredom.
What this “turning point” really signals for investors
The constellation of on-chain signals suggests the market is transitioning from an overheated upswing into a more uncertain, digestion phase. This is often where narratives start to fragment: some participants proclaim a new bull phase, while others warn of a deeper downcycle.
For longer-term investors, this in-between zone can be both risky and opportunistic:
– Risky, because valuations are no longer at the extremes of fear where downside is historically limited, but macro and structural headwinds could still drive further selling.
– Opportunistic, because some of the speculative froth has been removed, and fundamental holders are increasingly in control of supply, potentially setting up a stronger base for the next sustained uptrend—once macro conditions ease or fresh catalysts emerge.
What would a clearer bottom look like?
If the market were to move toward a more textbook bottom similar to past cycles, several developments would likely be visible on-chain:
– MVRV approaching or dipping below 1.0 for a sustained period.
– NUPL shifting into a zone of net unrealized loss, signalling broad investor pain.
– Long-term holders showing average unrealized losses in the 30–40% range flagged by analysts, indicating real capitulation rather than just reduced profit.
– A sharp drop in the percentage of supply in profit, reflecting that most coins are sitting below their cost basis.
– Spikes in exchange inflows from older coins, implying that even more patient holders are finally giving up or being forced to sell.
None of these conditions are firmly in place yet. Instead, the data reflects a market that has cooled but not cracked.
Why the current phase still matters
Even if this is not a final bottom, the present environment can be pivotal for the longer-term structure of the cycle. Periods of consolidation and moderate stress often:
– Wash out overleveraged traders and short-term speculators.
– Allow stronger hands and institutional players to accumulate without heavy competition from retail mania.
– Encourage more realistic pricing of future growth and adoption, aligning expectations with fundamentals rather than hype.
– Set the stage for the next leg of the cycle, whether that means another surge higher or a more extended sideways range.
For Bitcoin specifically, every corrective phase also serves as a test of the asset’s evolving investor base. The way holders behave—how quickly they sell, how soon they re-accumulate, and which cohorts dominate flows—can reshape the market’s resilience in future shocks.
How traders and holders might interpret the signals
Short-term traders may view the “no man’s land” status of key metrics as a sign that volatility is likely to stay elevated and direction less certain. In such environments, range trading, hedging strategies, and strict risk management tend to become more important than bold directional bets.
Long-term holders and allocators, by contrast, might focus less on timing an exact bottom and more on assessing whether the market has transitioned into a healthier, less speculative state. While on-chain data suggests there may be room for further downside if macro conditions worsen, it also indicates that the most euphoric phase of the cycle is behind us, which can be more conducive to disciplined accumulation strategies.
The bottom line
Bitcoin’s on-chain profile is sending mixed but important signals. Several of the same indicators that once flagged past inflection points are now turning down, showing that the market is well past peak euphoria. Yet those signals have not yet reached the extreme, washed-out levels that historically align with a firm, long-term bottom.
With inflation and macro uncertainty still casting a shadow over risk assets, the current phase looks less like a final capitulation and more like a transitional turning point—an uncomfortable middle ground where neither the bulls nor the bears have secured a decisive victory.
Until deeper capitulation or a clear macro and liquidity shift emerges, investors should treat this environment as one of heightened uncertainty: a market that is repricing, but not yet reset.