Bitcoin markets have not shown clear signs of getting better. Analysts are studying how different groups of investors behave when prices are not moving up. This helps them guess what may come next for Bitcoin.
One important group to watch is the long-term holders, or LTH. These are people who keep their Bitcoin for a long time. They tend to care less about small price moves that happen in the short term. This makes them different from traders who try to earn small gains every day.
Right now, long-term holders are sitting on an average profit of about 74 percent. This means, on average, the money they paid for their Bitcoin is now worth 74 percent more than that price. But this profit is getting smaller as the price moves closer to the long-term holders' cost basis. The cost basis is the original price paid for the Bitcoin. Analysts estimate the current cost basis to be around $38,900 per Bitcoin. As the price comes down toward that level, the big profits the holders have gradually shrink.
What happens next in a bear market often follows a pattern. A bear market is a period when prices fall and investor optimism is low. A key moment in this pattern is when the price falls below the cost basis. In this situation, many investors start selling to realize losses. This selling can push prices down further in a phase called capitulation. Capitulation is when investors give up on trying to recover losses and sell assets, usually after a sharp price drop. It can signal a potential end to the downtrend, but it also brings large losses for many holders.
Historically, Darkfost, a CryptoQuant analyst, notes that every bear market has broken below the cost basis and then entered a final capitulation with realized losses of around 20 percent. Only after this capitulation does the market often begin to recover and move into a new bull phase, where prices rise again for a while.
Another sign the market is hurting comes from Glassnode, a data analytics firm. They reported that the 90-day moving average of the Realized Profit/Loss Ratio has fallen below 1. This means, on average, profits realized by selling Bitcoin have become smaller and losses realized have become larger over the recent period. A moving average is a simple way to smooth out price data by looking at the average of data points over a set number of days. In this case, the 90-day window shows a longer trend. This excess loss-realization regime suggests the market is still in a tough phase. In practice, such bearish conditions tend to last at least six months before fresh liquidity—money ready to be used for trading—returns to the market.
Another voice, analyst James Check, adds details about how bad the recent months have been. He says Bitcoin has nearly printed five red monthly candles in a row. A red monthly candle means the price closed lower than it did in the previous month. This is a sign of weakness in the market. Check also notes that the weekly realized volatility spiked to more than 150 percent. Volatility measures how much the price moves. A spike like this usually happens around capitulation events when many investors sell quickly.
Check also points to another piece of data: the weekly Relative Strength Index, or RSI, is at one of the most oversold readings in Bitcoin's history. RSI is a tool that helps traders judge how fast prices are moving up or down. An oversold reading can mean prices could bounce, but it can also stay low for a long time in a weak market. In addition, about $70 billion worth of Bitcoin has moved to new owners in the price range between $60,000 and $70,000 this year. A big amount of money changing hands in a specific price range shows strong activity at that level.
Another interesting fact is about the supply of Bitcoin. Some coins are in loss. In this context, being in loss means the current price is below the price paid for those coins. Recently, the number of coins in loss hit 10 million coins. This is the fourth-highest reading ever. Analyst James Van Straten added that the circulating supply could reach 20 million Bitcoins next week, and that 50 percent of all Bitcoin is in loss right now. He argues that this level of capital destruction, or losing money on many coins, is often enough to help form a bear market bottom—the lowest point of the bear market before prices start to rise again.
Despite all this, there was a small rebound in early trading on Wednesday morning in Asia. Bitcoin rose by about $2,000 and reached around $66,000. Yet, this move does not look like a healthy, lasting recovery. Bearish sentiment remains strong. The price today shows a pattern of lower highs, with $60,000 acting as a support level for now, meaning buyers have stepped in at that level but prices have not yet moved higher for a sustained period.
In short, many analysts say Bitcoin's price path now shows stress in several parts of the market. Long-term holders still own Bitcoin with some profits, but those profits are shrinking as the price moves toward the original purchase prices. If the price falls below the cost basis with significant selling, a final capitulation could occur. After that, the market might stay weak for several months before new buyers return and push prices higher again. This view is supported by data from Glassnode and other researchers who see a difficult period ahead, followed by a potential recovery only after a longer stretch of time. The picture is complicated, and many factors could influence the next moves in Bitcoin.
This article summarizes several expert opinions and data points from industry researchers. It originally appeared on CryptoPotato as Bitcoin Drifting Toward the Long-Term Holder Pain Point: Analysts, with charts and further analysis by CryptoQuant and Glassnode.
Definitions
- Bitcoin — Bitcoin is the first decentralized cryptocurrency that uses a peer-to-peer network and a public ledger (the blockchain) to enable value transfer without intermediaries.
- Bear market — A bear market is a market condition in which prices are falling, typically by 20% or more from recent highs, and investor sentiment is pessimistic.
- Cost basis — Cost basis is the original cost of an asset for tax purposes, used to determine capital gains or losses when the asset is sold.
- Capitulation (finance) — Capitulation refers to the moment when investors give up on trying to recapture losses and sell assets, typically following a sharp price decline, often signaling a potential end to the downtrend.
- Relative strength index — The relative strength index (RSI) is a momentum oscillator used in technical analysis to measure the magnitude of recent price changes and to identify overbought or oversold conditions.
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