The Bitcoin bear market has entered its final phase, with improving on-chain fundamentals but still lacking upward momentum
- Core Thesis: Bitcoin on-chain data indicates the bear market is approaching its end. Key signals include the crossover of short-term and long-term holder cost bases, the long-term holder supply ratio hitting an all-time high of 84%, and the proportion of loss-making supply falling below 50%. However, the market has not yet fully bottomed, and a reversal requires multiple conditions to be met.
- Key Elements:
- The cost bases of short-term and long-term holders are converging (short-term cost falling from $112,500 to $69,000). This shift in market influence from short-term retail investors to long-term investors is a hallmark of the final bear market phase.
- The long-term holder supply ratio has reached 84%, an all-time high, indicating scarce circulating supply (only 16% is short-term liquidity). Recent monthly accumulation of 1.29 million BTC shows mature investors are continuing to add to their positions.
- The percentage of loss-making supply peaked at 50% and has since declined to 46%. Historical data suggests a subsequent bottoming-out period of approximately 13–101 days. The market has entered the countdown to a bottom.
- The Realized Market Variance Z-Score is -2.35, an extremely low level ranking in the bottom 6% historically. This reflects thin profitability across the market, a zone that historically often precedes significant gains.
- Short-term holding momentum indicators are bearish but show higher lows. The bullish sentiment index is only 20 (far below 60). The price has not yet broken through two key resistance levels: the realized market average price and the average short-term cost.
- Sustained miner selling could drive the price down to $47,000. If the price fails to break recent short-term high costs, it may fall back to around $58,000.
Original Author: Ashrith Rao
Original Translation: Saoirse, Foresight News
After nine consecutive months of price decline, Bitcoin on-chain data proves that the market is in the final stages of a bear market.
This market cycle has three hallmark characteristics: a critical crossover in the cost basis of long-term and short-term holders, an unprecedented tightening of circulating supply, and a prolonged, sustained exodus of speculative capital. This analysis is entirely data-driven, studying the market's transition from the throes of deep losses to the accumulation layout by long-term capital, devoid of subjective emotional judgment.
The Crossover Signal: The Baton of Market Power is Passed
The most intuitive signal from the on-chain data dashboard is that the cost basis of long-term holders and short-term holders is converging, a highly indicative directional marker.
In mid-July 2026, Bitcoin exhibited a classic bear market bottoming indicator: the realized price of short-term holders consistently trended lower compared to long-term holders. This signifies a collective stop-loss exit by short-term retail investors, far beyond ordinary chart fluctuations.
Since the peak of this cycle, the average cost basis for short-term holders has plummeted from approximately $112,500 to $69,000. Long-term holders, often more mature investors with better market information, have maintained a steadfast cost basis. In contrast, the large-scale selling of recently entered capital has directly caused the sharp decline in short-term holding costs.
Historical patterns show that this type of cost basis crossover often signals the onset of the bear market's final phase. Retail investors with lower risk tolerance are effectively flushed out by the market, leaving seasoned investors holding the chips to steer the subsequent market direction.
If the crossover state can be maintained over a longer period, it indicates the official start of the bottoming process. Among these, three consecutive days firmly holding within the crossover range is an important confirmation standard.
Supply Contraction: Formation of an 84% Supply Wall
The crossover of long and short-term holding costs fundamentally represents a shift in market power over the circulating supply, and the underlying supply structure confirms this change.
Data from Alphractal shows that the proportion of Bitcoin held by long-term holders has reached an all-time high of 84%. This is the first time since 2016 that the liquid circulating supply available to short-term traders accounts for only 16% of the total. The total holdings of long-term investors are 5.2 times that of short-term circulating chips, sufficient to prove that mature investors insist on adding positions during market weakness, demonstrating strong holding conviction.
This scarcity of circulating supply creates a unique market structure: current market liquidity is at historic lows. Should market demand experience substantial growth, Bitcoin's price will likely exhibit violent fluctuations. Data from crypto quantitative research firm CryptoQuant corroborates this judgment: In May of this year, the net position increase by long-term holders hit a six-year peak, accumulating a total of 1.29 million Bitcoin.
Another distinct feature of the chip structure is that, apart from chips held for 6 to 12 months which are transitioning en masse to long-term holdings, the circulating supply in all other holding period cohorts is continuously decreasing, with speculative capital steadily exiting.
Bottom Signal Confirmation: Panic Selling Enters Countdown Phase
Combining the scale of loss-making chips with the Realized Capital Variance (RCV) model corroborates that the market is in the late stages of a bear market.
Research firm K33 provides a key data point: On June 5th, the proportion of Bitcoin's circulating supply in a loss state breached the 50% critical threshold; this ratio has since retreated to 46%. Historically, when the proportion of loss-making chips peaks and then falls back below 50%, the subsequent bottoming period typically ranges from 13 to 101 days, indicating we are now in the countdown phase for the bottom. The current base-building cycle is the second longest in history. Various signs strongly suggest that the worst phase of the market is likely over, rather than the beginning of a decline.
The Z-score for the realized market capitalization variance, as calculated by CryptoQuant, stands at -2.35, a value in the extreme low percentile (bottom 6%) historically. This implies that profitability across the market is generally very thin. Looking back at history, such zones often represent the precursor phase for substantial subsequent gains.
Currently, various indicators are gradually resonating. Prices have largely digested valuation pressures and negative macroeconomic factors. However, a clear entry buy point has yet to emerge in the market.
Risk Reminder: Trend Reversal Still Requires Multiple Conditions to Be Met
Although fundamental data such as long-term chip holdings lean bullish, various momentum technical indicators are still sounding alarms.
The overall momentum indicator for short-term holdings remains bearish, though its lows are forming a gradual uptrend; the Bullish Sentiment Index currently sits at only 20, far from the 60-point threshold typically needed to sustain a continued rally. Prices have currently failed to break through two key dynamic resistance levels: the True Market Mean Price and the Average Cost Basis of Short-Term Holders.
Glassnode suggests that confirming a complete reversal of the bull-bear cycle requires two prerequisites: further alleviation of panic selling pressure from retail investors, and a stable and improving inflow of institutional capital. Multiple models estimate that if Bitcoin miners continue to sell for cash, the price could test as low as $47,000. Conversely, if it fails to break above the high cost basis of short-term holders, the market will likely retreat to seek support around the $58,000 level.
Overall, the cyclical low point is in sight but has not been fully confirmed. Various data indicate that the market is in the final structural phase of a slow recovery from the lows. While a complete narrative for a trend reversal has not yet been fully constructed, the foundational conditions for a market bottom are steadily falling into place one by one.
