Bitcoin is going through a phase of tension that looks more and more like the start of a real bear market. Several on-chain indicators show that the market is approaching areas historically associated with cycle lows. Are we on the cusp of a general capitulation… or simply halfway through a cycle correction?
In brief
- Bitcoin's supply in profit falls to around 11.2 million BTC, down from 9 million at the low point of the last bear market.
- Around 11.2 million BTC are still in profit, compared to 8.2 million now in loss.
- For several analysts, the market is entering a zone of potential undervaluation.
Bitcoin enters a critical zone
The latest data released by CryptoQuant shows a significant change in the structure of the bitcoin market. Today, around 11.2 million BTC are still circulating with latent capital gains, while 8.2 million are held at a loss. This level has not been observed since the end of 2022.
For the analyst “Darkfost”, this shift is not trivial. It gradually brings the market closer to the typical configurations of a true bear market.
At the low point of the previous cycle, the profit supply fell to around 9 million BTC, while the loss supply increased to 10.6 million. The current market has therefore not yet completely reached this level of pain, but it is clearly getting closer.
This observation supports a more constructive reading: bitcoin could enter a historically attractive valuation zone. In other words, the market is approaching a level where the excesses of the previous increase have already been largely erased.
This signal deserves all the more attention because it appears in a paradoxical context. Despite the price weakness, US spot Bitcoin ETFs attracted $1.32 billion in March. This suggests that a portion of institutional investors continue to buy while the market remains in doubt.
Why the real trough may not be there yet
However, not everyone shares this optimistic reading. For Andri Fauzan Adziima, head of research at Bitrue, the current data mainly reflects increasing pressure, and not yet total capitulation.
His argument is simple: during real cycle bottoms, market suffering generally becomes more extreme. By 2022, more than 50% of Bitcoin's supply was in loss, while several valuation indicators had reached much more violent stress levels. We're not there yet.
This nuance is important. It means that the market could still go through a long consolidation phaseor even a new bearish leg before a more lasting recovery. Some analysts thus see a potential structural low point around $55,000, without excluding further volatility.
Added to this is a major macro factor: the US dollar remains too strong. Historically, Bitcoin has often struggled to gain traction when global liquidity contracts. The rise in the DXY, geopolitical uncertainty and expectations of high rates continue to attract capital towards bonds and assets deemed more defensive.
In short, it is not yet time for panic, but vigilance is essential. The market is at a crossroads: on-chain data is sending real stress signals, but without reaching the historical extremes synonymous with a definitive low point. The Fed's next decision, or an unexpected geopolitical signal, could change everything, one way or the other.
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