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Executive Summary

The macroeconomic environment remains uncertain with the restructuring of global trade relations ongoing. This uncertainty has contributed to heightened volatility across both the U.S. Treasury and equity markets.

In response to the challenging economic backdrop, Bitcoin has recorded its largest drawdown of the cycle. Nevertheless, this remains within typical bounds of previous corrections during bull markets. Additionally, the median drawdown of the cycle remains an order of magnitude lower than previous iterations, highlighting a more resilient demand profile.

Liquidity across the digital asset ecosystem continues to tighten, reflected in declining capital inflows and stagnation in stablecoin growth.

Investors are under considerable stress, currently facing the largest unrealized losses on record. However, the bulk of these losses are concentrated among newer market participants, while Long-Term Holders remain broadly in profit.

💡 View all charts in this edition in  The Week On-chain Dashboard. Macro Uncertainty Remains Rife

Uncertainty looms large across the macroeconomic landscape, with the Trump administration aiming to upend and restructure the status-quo of global trade relationships. As it stands, U.S Treasuries operate as the collateral and foundation of the financial system, with the 10yr Treasury considered to be the benchmark risk-free rate.

A key aim of the administration has been to lower the yield of the 10yr Treasury, and they found initial success in the opening months of the year with yields trading down to 3.7% as wider markets sold off. However, this was fleeting, as yields have since surged back to 4.5%, erasing this progress, and creating significant volatility within the bond market.

Source: FRED

We can quantify the disorderly behavior of the bond market by way of the MOVE Index. This metric is a key indicator for bond market stress and volatility, derived from the implied 30-day volatility in the U.S. Treasury market based on option prices across various maturities.

By this measure, volatility in U.S treasures has surged higher, underscoring the extreme degree of uncertainty and fear amongst bond market investors.

Source: Tradingview

We can also measure disruption in U.S equity markets using the VIX Index which measures the market’s expectation for 30-day volatility in the U.S. stock market. Volatility in the bond market has also notably manifested within the equities market, with the VIX now recording similar values of volatility to the 2020 COVID crisis, the 2008 GFC, and the 2001 Dot Com Bubble.

Volatility in the base collateral of the financial system tends to result in a pull-back of investor capital, and a tightening of liquidity conditions. Given Bitcoin and digital assets are one of the most liquidity sensitive instruments, they were naturally swept up in the volatility and risk asset drawdown.

Source: FRED

Amidst this turmoil, the performance of hard assets remains remarkably impressive. Gold continues to surge higher, having reached a new ATH of $3,300, as investors flee to the traditional safe haven asset. Bitcoin sold off to $75k initially alongside risk assets, but has since recovered the weeks gains, trading back up to $85k, now flat since this burst of volatility.

As the world adjusts to changing trade relationships, Gold and Bitcoin are increasingly entering the centre stage as global neutral reserve assets. Thus, one can argue there is a fascinating signal signal in the performance of Gold and Bitcoin during last weeks events.

Live Chart Bitcoin Remains Resilient

Whilst it is impressive to observe Bitcoin still trading within $85k region, the leading digital asset has still experienced heightened volatility and drawdowns in recent months. The asset has recorded its largest drawdown in the 2023-25 cycle, reaching a max pull-back of -33% below its ATH.

However, the magnitude of the drawdown remains within the typical bounds of previous corrections during bull markets. In prior macroeconomic events like last week, Bitcoin has typically experienced greater than -50% sell-offs in such events, which highlights a degree of robustness of modern investor sentiment towards the asset during unfavourable conditions.

Live Chart

To quantify the resilience of the current cycle, we can assess the rolling median drawdown profile for all bull market structures.

2011: -22%

2011-13: -18%

2015-18: -11%

2018-21: -19%

2022+: -7%

The median drawdown for the current cycle is considerably shallower than all previous cases. Drawdowns since 2023 have been shallower and more controlled in nature, suggesting a more resilient demand profile, and that many Bitcoin investors are more willing to HODL through market turmoil.

Live Chart Liquidity Continues to Contract

We can also assess how macro uncertainty has affected the liquidity profile of Bitcoin.

One way we can measure Bitcoins internal liquidity is via the realized cap metric, which calculates the cumulative netflow of capital into a digital asset. The realized cap is trading at an ATH value of $872B, however, the rate of capital growth has compressed to only +0.9% per month.

Amidst an extremely challenging market backdrop, it is impressive capital flows into the asset remain positive. Given the rate of fresh capital entering the asset is softening, it does also suggest that investors are currently less willing to allocate capital in the near-term, suggesting risk-off sentiment is likely to remain the default behavior for the time being.

Live Chart

The Realized Profit and Loss metrics are the input components to the Realized Cap, enabling us to measure the difference between a coin’s acquisition price, and its value at the time it is spent on-chain.

Coins spent above their acquisition price are considered to lock in Realized Profits.

Coins spent below their acquisition price are considered to lock in Realized Losses.

By measuring Realized Profit and Loss in BTC terms, we can normalize all profit and loss-taking events relative to Bitcoin’s expanding market cap over cycles. Here, we introduce a new variant, which is further refined by adjusting for volatility (7-day realized volatility), helping to account for the diminishing returns and growth rate as Bitcoin matures over its 16-year history.

At the moment, profit and loss taking activities are relatively balanced, which results in the relatively neutral rate of capital inflow noted earlier. It could be argued that this reflects a saturation in investor activity within the current price range, and typically preempts a period of consolidation as the market tries to find a new equilibrium.

Live Chart

By calculating the difference between the Realized Profit and Realized Loss, we can produce the Net Realized Profit / Loss metric. This metric measures the directional dominance of value flowing in/out of the network.

Utilizing the volatility adjusted Net Realized Profit/Loss metric, we can compare it to the cumulative median, seeking to distinguish between two market regimes.

Values consistently above the median typically signal a bull market, and net capital inflows.

Sustained values below the cumulative median is typically considered a bear market, with Bitcoin experiencing net capital outflows.

Markets routinely drive investors to the brink of maximum pain, typically reaching a peak at the turning point between a bull and a bear cycle. We can see how the volatility-adjusted Net Realized Profit/Loss oscillates around its long-term median, acting as a mean reversion tool.

This metric has now reset back to its neutral median value, suggesting the Bitcoin market is now at a key decision point, and draws a line in the sand for the bulls to re-establish support in the current price range.

Live Chart

Stablecoins have become a foundational asset class within the digital asset ecosystem, acting as the quote asset for trading on both centralized, and decentralized trading venues. Assessing liquidity through the lens of stablecoins provides an additional dimension to our analysis, providing a holistic lens into the digital asset liquidity profile.

The growth of stablecoin supplies remains positive, but is softening in recent weeks. This provides an additional layer of confluence that there has been a contraction in broader digital asset liquidity, as measured via a softer demand for digitally native dollars.

Live Chart Inspecting Investor Pressure

Amid ongoing market turbulence, it's important to evaluate the scale of unrealized losses currently held by Bitcoin investors.

When measuring the unrealized loss held by the market, we note that unrealized losses have reached a new ATH of $410B during the market decline to $75k. When we inspect the composition of unrealized losses, we can see that the majority of investors are holding drawdowns of up to -23.6%.

The total magnitude of unrealized losses are larger in magnitude when compared to the May 2021 sell-off and the 2022 bear market. However, it is worth noting that on an individual investor level, the market endured far steeper drawdowns of up to -61.8% and -78.6%, respectively.

Whilst the total unrealized losses are larger (given Bitcoin is a larger asset today), individual investors are less challenged today compared to prior bear market periods.

Live Chart

Despite the ATH in unrealized losses held, the percentage of the circulating supply held in a profitable position remains elevated at a value of 75%. This suggests the majority of underwater investors have been new buyers across the topping formation.

Of interest, the percent supply in profit is approaching its long-term mean. Historically, this this is a key area to defend before a super majority of coins fall into loss and a critical threshold between bull and bear market structures.

Bull markets are typically characterized with the supply in profit above its long-term mean, routinely finding support at this level across the regime.

Bear markets are historically punctuated with deep and sustained periods below the long-term mean, with frequent rejections at this level confirming the decline in profitability.

Similarly to the Net Realized Profit/Loss metric, a rebound off of the long-term average band would be a positive observation if defended.

Live Chart

As the market continues to contract, it's reasonable to expect the absolute size of unrealized losses to grow. To account for this and normalize across drawdowns of varying magnitudes, we introduce a new variant of the metric: Unrealized Loss per Percent Drawdown, which expresses losses held in BTC terms relative to the percentage decline from the all-time high.

Applying this metric to the Short-Term Holder cohort reveals that their unrealized losses, when adjusted for the depth of the drawdown, are already substantial and comparable to levels observed during prior bear market onsets.

Live Chart

Nevertheless, current unrealized losses are largely concentrated among newer investors, while long-term holders remain in a position of unilateral profitability. However, an important nuance is emerging, as recent top buyers age into long-term holder status, as noted in WoC 12, the level of unrealized loss within this cohort is likely to increase.

Historically, substantial expansions in unrealized losses among long-term holders have often marked the confirmation of bear market conditions, albeit with a delay following the market peak. As of now, there is no clear evidence to suggest such a regime shift is underway.

Live Chart Summary and Conclusion

The macroeconomic landscape remains uncertain, marked by ongoing shifts in global trade dynamics which have fueled substantial volatility across U.S Treasury and equity markets. Notably, the performance of both Bitcoin and Gold in particular have remained remarkably robust across this challenging period. One could consider this a fascinating signal as the foundations of the financial system enter a period of transition and change.

Despite Bitcoin’s noteworthy resilience, it has not been immune to the heightened volatility seen across global markets, marking its largest drawdown of the 2023–2025 cycle. This has greatly affected newer market participants, who now hold the lions share of market losses. However, from an individual investor perspective, the market has endured far more severe drawdowns in prior cycles, notably during the May 2021 and 2022 bear markets. In addition, mature and tenured investors remain unfazed by the ongoing economic stress, and reside in a position of near unilateral profitability.

Disclaimer: This report does not provide any investment advice. All data is provided for informational, and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. 

Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary

The announcement of US tariffs has caused significant disruption to major financial markets, with many experiencing some of their worst trading days since March 2020.

Capital inflows into the major digital assets have ground to a halt, causing major headwinds and a contraction of liquidity.

However, loss taking events across Bitcoin and Ethereum appear to be reducing in scale with each price leg lower, suggesting investors may be approaching a degree of near-term seller exhaustion.

The collapse across digital assets has been broad-based, with the altcoin market devaluing from $1T in Dec 2024, to a current value of $583B.

Confluence between on-chain and technical models suggests that $93k is a key area of interest which must be reclaimed before upwards momentum is re-established. On the downside, the $65k to $71k region remains a critical threshold for the Bitcoin bulls to hold.

💡 View all charts in this edition in  The Week On-chain Dashboard. A Broad Based Decline

The announcement of Trump’s “Liberation Day” Tariffs has sent shock-waves through financial markets, with major indexes experiencing a unilateral decline. The US administration’s policy stance has shifted toward seeking a weaker U.S. dollar, lower interest rates, softer oil prices, and a contraction in fiscal spending. The combination of these factors may result in a marked slowdown in the US economy, and a substantial contraction in overall liquidity.

This tariff-related uncertainty has acted as a catalyst for a widespread risk-off event, catalyzing a sell-off across most major financial indices, with many markets experiencing their worst trading days since March 2020.

Source: Yahoo Finance

The digital asset market, which tends to have a heightened response to changes in global liquidity, has not escaped the drawdown, with many digital assets experiencing heavy double digit percentage point declines in prices.

Bitcoin, the leading digital asset, experienced a contraction from $83.5k to $74.5k, reflecting a $150B decline in the market cap. Ethereum, the second largest digital asset took even more of a beating, with the ETH price falling from $1800 to $1380, resulting in a market cap contraction of $40B.

Live Chart

Across both major assets, there has been a clear reduction in capital inflows since the start of the year. This is largely reflected within the 30-day Realized Cap change, which assesses the monthly change in the assets net capital flow.

Bitcoin peaked at a capital inflow rate of $100B/mth, which has now contracted to +$6B/mth.

Ethereum peaked at a capital inflow rate of +$15.5B/mth, and is now experiencing a capital outflow of -$6B/mth.

Net capital flows across the Bitcoin network are beginning to grind to a halt, suggesting a lack of fresh capital entering the asset to support higher prices. The capital outflows for Ethereum are a result of ETH which was acquired at higher prices, being spent at lower prices, locking in a net capital loss relative to its acquisition price. This generally suggests that Ethereum is experiencing more headwinds relative to Bitcoin, which is being reflected in the weaker price performance.

Live Chart

If we anchor the total change in the realized cap since the collapse of FTX in late 2022, we can quantify the magnitude of capital absorbed by both Bitcoin and Ethereum since the cycle low.

The Bitcoin Realized Cap increased from $402B to $870B, adding +$468B in size (+117%).

The Ethereum Realized Cap increased from $183B to $244B, adding +$61B in size (+32%).

This disparity in capital inflows between the two assets partly underscores why these assets have experienced diverging performance since 2023. Ethereum has experienced a relatively smaller inflow of demand and fresh capital this cycle, which has resulted in weaker price appreciation and a lack of a fresh ATH, despite Bitcoin prices reaching over $100k in December.

Live Chart

The MVRV Ratio describes the ratio between the spot price and the realized price, gauging the magnitude of unrealized profit held on average for each asset. Values above 1 signal an average unrealized profit, and trading below 1 indicates an unrealized loss.

Again, we can see a notable divergence between Bitcoin and Ethereum MVRV Ratios since the beginning of the bull market cycle in January 2023. Bitcoin investors have consistently held a greater magnitude of unrealized gains compared to their Ethereum counterparts, with the ETH MVRV Ratio dipping back below 1.0 in March.

Live Chart

By calculating the difference between the BTC and ETH MVRV Ratios, we can identify periods during which the average Bitcoin holder is outperforming (or underperforming) the average Ethereum holder in terms of paper gains held.

A positive spread indicates that Bitcoin investors, on average, are holding greater unrealized profits than their Ethereum investor counterparts.

A negative spread implies higher average profitability amongst Ethereum investors.

As previously noted, Bitcoin investors have maintained a higher average profitability relative to Ethereum investors since the onset of the current bull market. This trend has now extended for 812 consecutive days, marking the longest such period on record.

Live Chart

As evidenced, a relatively smaller influx of investor demand has been a primary factor in Ethereums softer performance this cycle. The growing divergence between the two major digital assets is best highlighted by assessing the ETH / BTC price ratio.

When measuring from the Merge in September 2022, the ETH/BTC ratio has collapsed from a value of 0.080 to a current value of 0.0196, reflecting a -75% decline. This is the lowest value of this cross since May 2020, with only XX trading days recording a lower value.

We can also see that the current bull market has lacked any extended periods where Ethereum significantly outperformed Bitcoin, which is highly atypical of bull market conditions, and further evidence of an unusual deviation in the historical patterns and performance digital asset investors are used to.

Live Chart Inspecting Losses

In the wake of an aggressive market drawdown like we have seen this week, it is prudent to inspect the reaction of investors, particularly since bear markets are typically initiated by periods of heightened fear, and substantial losses.

By evaluating the 6-hour rolling window for realized losses, we can better understand the behavior and disposition of market participants within the current downturn.

Investor capitulation events for Bitcoin have been sizeable, with a peak of $240M in losses locked in across the 6-hour window. This is of a similar scale to some of the largest loss events of the cycle.

However, the magnitude of losses realized during this drawdown has started to decrease with each successive price leg lower. This suggests a form of near-term seller-exhaustion may be starting to develop within this price range.

Live Chart

A similar behavior pattern can be seen for Ethereum, with losses locked in throughout the recent drawdown reaching a peak value of $564M. This puts the current sell-off as one of the largest loss taking events since the start of the bull market in Jan-2023.

The severity of realized losses for both assets is decreasing with each leg lower, which perhaps points to investors becoming more accustomed to lower price ranges, and tumultuous market conditions.

Live Chart Broad Contraction

The prevailing contraction in market liquidity has triggered a significant devaluation across the entire altcoin sector, with assets further out on the risk curve exhibiting heightened sensitivity to liquidity shocks, usually resulting in more severe drawdowns.

As of December 2024, the aggregate altcoin market capitalization (excludes BTC, ETH and Stablecoins) had reached a cycle peak of $1T. Since then, it has retraced sharply, declining to $583B, a drawdown of over -40% across just a handful of months.

Live Chart

Notably, there has been a lack of idiosyncratic behavior amongst the altcoin subsectors during this drawdown. The contraction appears broad-based, with all sectors experiencing a significant devaluation, with even Bitcoin recording a negative performance over the last 3 months.

Live Dashboard Range Navigation

To close out, we will assess how the market is reacting to key technical and on-chain cost-basis levels, which provide tools to help navigate choppy and uncertain market conditions.

Technical analysis has been a cornerstone tool for investors for many decades, and Bitcoin investors tend to respond to a certain set of moving averages. The 111DMA, 200DMA and 365DMA are commonly used for assessing the momentum of the Bitcoin market.

This can be considered under the following framework

The sharp sell-off below the 111DMA ($93k) indicated the first major hit to market momentum, with the market marking no significant attempt to reclaim the level.

Following the first sell-off, price oscillated around the 200DMA ($87k), commonly considered as a bull/bear threshold by many technical analysts. Indecision around this pricing level eventually led to rejection, and the next major price leg lower.

Most recently, price crashed below the 365DMA ($76k) for the first time since the 2021 cycle. This is a key momentum level that has thus far held as support, but needs to remain as support to avoid further downside momentum from being established.

Live Chart

During bull market uptrends, Short-Term Holder (STH) investors are often responsible for the majority of loss taking events during capitulation events. Changes in their behavior and sentiment can provide critical insight into the severity of market corrections, and how investors are responding to it.

The STH cost-basis has historically functioned as a critical benchmark level for evaluating market momentum during uptrends. We can construct ±1 standard deviation bands around the STH cost basis, which have typically acted as a form of upper and lower bound for local price action.

Short-Term Holder Cost-Basis +1σ: $131k

Short-Term Holder Cost-Basis: $93k

Short-Term Holder Cost-Basis -1σ: $72k

Bitcoin’s initial drop below the Short-Term Holder Cost Basis (STH-CB) signalled the first sign of weakening momentum (alongside the break below the 111DMA). This was confirmed when the price rallied into the underside of this level, and was rejected, reinforcing a shift in investor sentiment.

The spot Bitcoin price is now firmly between the STH-CB and its lower -1σ band, with these levels defining the boundaries of our trading range between $93k and $72k.

Live Chart

The Active Realized Price and Realized-Price-to-Liveliness Ratio are another set of price models, often trading near the midpoint of Bitcoin cycles. These two models represent a cost basis estimate for active market participants, by discounting lost and long-dormant supply.

Statistically speaking, approximately 50% of trading days see the spot price trade above / below these pricing models, allowing them to serve as a key mean reversion model, and a threshold delineating bullish and bearish market regimes.

Active Realized Price: $71k

True Market Mean: $65k

We now have confluence across several on-chain price models, highlighting the $65k to $71k price range as a critical area of interest for the bulls to establish long-term support. Should price trade meaningfully below this range, a super-majority of active investors would be underwater on their holdings, with likely negative impacts on aggregate sentiment to follow.

Live Chart Summary and Conclusions

Pressure across global financial markets continues to escalate, driven by mounting uncertainty around the U.S. tariff regime. This weakness has permeated to nearly all asset classes, as evidenced by a significant drawdown across all major macro indices.

Digital asset markets have been no exception, experiencing a broad-contraction across all market sub-sectors. Bitcoin has traded as far down as $75k, marking one of the deepest drawdowns since the start of the bull cycle in Jan-2023. Ethereum has been hit even harder, and many longer-tail digital assets are now deep into bearish market trends.

Using a set of both on-chain and technical price models, the $65k to $71k region emerges as a key area of interest for the bulls to re-establish long-term support. If Bitcoin prices fall below this, it is likely sentiment will take a large hit, as a super-majority of active investors will be underwater on their holdings.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary

The Bitcoin market continues to consolidate within the $76k to $87k range, with the Realized Profit/Loss Ratio starting to show signs of near-term seller exhaustion but not yet a renewal of sustained bullish momentum.

A longer-term view reveals a deterioration of investor profitability, and an on-chain ‘Death-Cross’ has occurred, suggesting the market may remain weak for the foreseeable future.

Supply in loss remains elevated at 4.7M BTC, while the behavior of coins held in-loss is signalling moderate investor stress. Together, these metrics build a picture of deepening bearish conditions.

Ripple’s XRP network recently experienced a +490% spike in address activity and a near-doubling of Realized Cap, signalling aggressive retail interest. However, profitability has rapidly faded, suggesting retail interest may be increasingly fragile.

💡 View all charts in this edition in  The Week On-chain Dashboard. Short-Term Relief

Recent weeks in digital asset markets have been defined by a steady downtrend, with Bitcoin prices trading -30% below the ATH. During this correction, the $76k to $85k zone has emerged as a critical area of interest, with the market trading in this range since late February. Each sell-off towards the range lows has been met with a swift recovery, suggesting the presence of strong reactive demand has shown up whenever prices trade below $80k.

To better understand these dynamics, we turn to the Realized Profit/Loss Ratio — a metric that compares the USD volume of realized profits versus losses. When this ratio falls below 1.0, it signals that more capital is being locked in a loss than a profit. These retests of the 1.0 level often coincide with local capitulation events and short-term price reversals.

Most notably, each dip into the $76k to $80k range has coincided with a P/L Ratio dipping below 1.0, highlighting episodes where losses outweighed profits. This imbalance typically marks a degree of seller exhaustion, where downside momentum fades as sell-side pressure is absorbed.

The resulting rebound appears as relief rallies, but we have not yet seen signs of renewed and sustained strength, reflecting a market which is still processing the emotional and financial hangover of the $109k ATH peak.

Live Chart Zooming Out

Although short-term seller exhaustion can provide momentary relief, a deeper question emerges: Are these rebounds signs of a larger bullish impulse, or simply reactive bounces within a broader downtrend?

While some market participants may speculate that repeated bounce-backs from the $76k–$80k range could eventually rally toward new all-time highs, a longer-term perspective is necessary to gauge the sustainability of such momentum.

The Realized Profit/Loss Ratio, is traditionally shown in logarithmic scale due to its volatility and wide range. To provide a clearer view of broader market dynamics, we have plotted a 90-day simple moving average to the metric on a linear scale. This smoothed presentation helps filter out the daily noise and highlights prevailing trends in spending profitability.

From this vantage point, the longer-term momentum has declined markedly since early January, despite the recent short-term spikes seen on the raw daily resolution. These brief profit-driven surges have failed to reverse the broader downtrend, suggesting that the macro picture remains one of generally weaker liquidity and deteriorating investor profitability.

So far, there is little evidence suggesting a structural bullish shift in momentum is underway.

Live Chart An On-Chain Death Cross

With profitability trending lower, it’s logical to turn our attention to price momentum as a core driver behind investors locking in both profit and loss.

Traditionally, technical analysts identify major shifts in momentum when a “Death Cross” occurs, indicating where the 50-day moving average drops below the 200-day. This event often signals a weakening trend.

To bring this concept into the on-chain domain, we construct an analogue using on-chain volume-weighted prices for coins moved in the last 1 month, compared to the last 6 months. This method directly reflects market sentiment by factoring in both when and how much capital actually moves on-chain.

The recent crossover of the short-term 1-month average below the long-term 6-month price could be considered to mark an on-chain Death Cross. This pattern has historically preceded 3–6 month-long bearish trends. If this cycle follows suit, it suggests the market may still be working through a period of weakness before the bulls can reestablish a robust uptrend.

Live Chart Bear Market Depth

Following signs of weakening momentum and shrinking profitability, the current market structure ticks nearly many of the boxes we look at for a typical bear market phase. The current market is characterized by tighter liquidity conditions, negative sentiment and momentum, and investor behaviour increasingly moving toward loss-taking events.

In such environments, investor psychology is dominated by fear and emotional fatigue. Historically, the most extreme bearish phases tend to culminate with a capitulation event, often setting the stage for bottom formation and an eventual recovery.

A comprehensive analysis of bearish markets involves two key dimensions: loss dominance and loss intensity. Loss dominance is captured by the Total Supply held in Loss, which tracks the volume of coins held below their on-chain acquisition price. On March 30, 4.7M BTC were held below their cost basis, which is an elevated level, though still below extremes seen in mid-2021, the 2022 bear market, and during the September 2024 drawdown.

Sizing up these losses helps frame where we are in the cycle and whether the market is deep in despair, nearing exhaustion, or may still have more pain to endure.

Live Chart Measuring Loss Intensity

Building on our view of loss dominance, the second dimension of investor stress is loss intensity, which captures how far below the cost basis investor holdings are. To assess this, we turn to the Market Value to Realized Value (MVRV) ratio, a metric that compares the spot price to the average cost basis of all coins in the supply.

To isolate the experience of underwater investors, we can focus specifically on the MVRV of supply held in loss. We can construct this metric by dividing the total USD-denominated unrealized loss held by the market by the number of coins contributing to it.

The Relative unrealized loss, which expresses the proportion of the market cap that is underwater, is currently at 2%. This is notably lower in magnitude than what we have seen in previous bear markets, such as in 2022. By this measure, whilst the number of coins held in loss is substantial, the magnitude of the unrealized losses they carry is not.

Live Chart

From this, we can compute the average cost basis of coins in loss using the following formula:

The realized price for the supply in loss is at $96.7k, which means, on average, the average underwater coin is holding an unrealized loss of -12%.

Live Chart

This Supply in-Loss Realized Price then serves as the denominator for constructing an MVRV ratio for these coins, creating an oscillator to compare how far underwater the average loss-holding investors are. We can then use this metric to compare across previous cycles and use this as an input for identifying how deep the investor distress is and whether there are any early signs of recovery.

The Supply in-Loss MVRV dropped sharply when the price broke below $93k and is now trading at 0.88, indicating a moderate degree of loss and stress within the market. This is one of the lowest levels of this MVRV for this cycle, although it is again not at the deeply low levels seen in prior bear markets.

Overall, there are many signs of weakness for Bitcoin investors. However, we should note that the magnitude of this weakness across several dimensions is not yet at the depth and severity of some of the more brutal downtrends Bitcoin has experienced in the past.

Live Chart Rippling Away

As Bitcoin investors grapple with deepening losses, a contrasting trend emerges in more retail-driven corners of the market. One defining feature of this cycle has been the rise of institutional demand via U.S. spot ETFs, with a lot of retail participation and speculation pulled toward alternative digital assets.

For this cycle in particular, Ripple (XRP) has been a preferred asset for trade amongst retail investors, and studying its behavior can therefore serve as a proxy for measuring retail speculative demand.

Since the 2022 cycle low, the quarterly average of daily active addresses for XRP has jumped by +490%, compared to just 10% for Bitcoin. This stark contrast suggests that retail enthusiasm has been attracted by XRP, thus providing a mirror for speculative appetite in the crypto space.

Live Chart

This becomes even clearer when we examine the path each asset has taken since the 2022 cycle low. While both Bitcoin and XRP have delivered a similar performance, both trading, roughly 5x to 6x off the bottom, the journey has been fundamentally different.

Bitcoin’s rally has followed a more organic and progressive trajectory, marked by steady growth and punctuated by sharp uptrends during key catalysts such as the launch of spot ETFs and developments around the U.S. elections.

In contrast, XRP traded largely sideways until December 2024 before experiencing an explosive surge higher, a price pattern more consistent with retail-driven speculation than with structured and sustained inflow of new demand.

Live Chart

During this recent surge, XRP’s Realized Cap nearly doubled from $30.1B to $64.2B, reflecting a substantial inflow of capital. Notably, close to $30B of this increase came from investors deploying capital within the last six months, highlighting the short concentration of this retail-led rally.

However, this capital influx has started to slow down since late February 2025, signalling a potential cooling-off in speculative appetite.

Live Chart

Alongside the short surge in capital flows, there’s been a rapid concentration of wealth in the hands of new investors, with the share of XRP’s realized cap, which is younger than 6 months, rising from 23% to 62.8% in just a short period of time.

When viewed together with the heavy retail participation, this sharp uplift in new holders raises caution signs, where many investors are likely to be vulnerable to downside volatility, given their now elevated cost basis.

Live Chart

This resembles a top-heavy cost basis structure, which becomes even more concerning when we observe the Realized Loss/Profit Ratio for XRP. This metric has been in steady decline since January 2025, suggesting that investors are realizing fewer profits, and increasingly large losses.

These conditions are a common signal of waning confidence and a general move towards more fragile, higher-risk conditions. Given the retail-dominated inflows, and largely concentrated wealth in relatively new hands, this alludes to a condition where retail investor confidence may be slipping, both in XRP, but may also be extended across the broader market.

Live Chart Summary and Conclusions

The Bitcoin market continues to digest the correction after the $109k ATH, with signs of increasing losses held, and locked in by investors. Although the price has stabilized above an area of demand around $76k–$80k, several on-chain momentum indicators suggest these may be relief rallies within a broader downtrend rather than the beginning of a sustainable reversal.

Analysis of XRP network trends also offers a proxy view for the magnitude of the risk appetite of retail investors. The asset has seen a dramatic uptick in address activity, capital inflows, and realized cap growth over the last 6-months. However, this enthusiasm appears to have reached a saturation point as profit-taking wanes, and losses have started to accelerate. The XRP market is showing signs of a top-heavy structure, with many investors caught on a relatively high-cost basis.

Altogether, this data reinforces a case where Bitcoin's correction is meaningful in scale but has not yet reached the severity of previous bear markets. For more speculative assets like XRP, demand may have already peaked, suggesting caution may be warranted until signs of a robust recovery start to emerge.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

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Executive Summary

New demand inflows continue to wane, evidenced by a stark contraction in profit and loss volumes absorbed by the market.

The magnitude of profit and loss locked in by investors is now similar to the later stages of the 2024 accumulation range, with prices trading between $50k-$70k.

The number of Short-Term Holder coins in loss has recorded its largest value since 2018, suggesting the majority of new-investors are now underwater on their position. However, the dollar value of loss held across these coins remains in-line with previous bull market conditions.

Long-Term Holder supply is beginning to grow once more, highlighting an investor preference for HODLing and accumulating supply.

💡 View all charts in this edition in  The Week On-chain Dashboard. Demand Side Wanes

Demand-side pressure remain relatively light at the moment, with Bitcoin’s price continuing to oscillate back and forth within a newly established trading range centred around $85k. One way we can quantify demand is by assessing the volume of realized profit and loss locked in by investors, providing critical information on the sell-side forces occurring across spot markets.

We can explore this phenomenon through two key concepts:

Capital Inflows: Fresh capital entering the network as a new buyer purchases a coin at a premium to the sellers original cost basis (thus locking in a realized profit).

Capital Destruction: Holders who have sold at a loss (a realized loss), with a new investor picking up the coins at a discount from its original buy-price.

Ultimately, this metric describes the premium, or discount a seller was willing to transact at, and the market price at which a buyer on the other side of the trade was willing to accept.

Currently, combined realized profit and loss volumes have experienced a major contraction since the $109k ATH, collapsing from XX$ to XX$ (-XX%). This metric is now recording a similar value to that seen during the 2024 accumulation zone between $50k and $70k, suggesting a similar demand profile.

Live Chart

We can also notice a dichotomy in the spending behavior occurring between the Long and Short-Term Holder cohorts.

Notably, the entirety of loss taking is originating from the Short-Term Holder cohort, who represent the most recent buyers, and thus the most likely to have bought in at higher prices. The unpredictable and volatile market conditions of late has clearly been a challenging landscape for new investors to navigate.

Conversely, the lions share of profit taking is being realized by the Long-Term Holder cohort, who through their extended time in the market, remain in an entirely profitable position.

Live Chart

Sustainable bull markets are typically characterized by consistent and growing inflows of fresh capital entering the network, with capital inflow events significantly outsizing those of capital destruction.

When assessing the difference between Long-Term Holder profit taking, and Short-Term Holder loss realization, we can see that this metric has returned to a neutral zone. Long-term Holder profits are now being offset by an equivalent volume of Short-Term Holder losses.

This suggests a relative stagnation in new capital inflows, weaker demand-side forces, and a slowing but still meaningful volume of profit taking acting as resistance.

Live Chart A Top Heavy Market?

The Short-Term Holder cohort are responsible for the majority of loss taking events in a bull market. This is usually the case during both local market corrections, as well as last-gasp sell-off when the market transitions into a protracted bearish structure. Therefore, they become the primary cohort to analyze when gauging the severity and potential depth of a market drawdown.

Recent downside volatility has created strenuous conditions for new investors, with the volume of Short-Term Holder supply held in loss surging to a massive 3.4M BTC. This is the largest volume of STH supply in loss since July 2018.

Live Chart

From a relative perspective, the percent supply in loss metric has now broken above its +1SD band, with over 90% of the Short-Term Holder supply now residing in an underwater position.

This degree of Short-Term Holder loss has only occurred twice during our current bull market, namely during the Aug 2023 downturn, and the Aug 2024 Yen-Carry-Trade unwind.

This highlights the gravity of the pressure currently being experienced by new investors, and increases the probability of a market wide capitulation event.

Live Chart

Another way to evaluate the pressure on the Short-Term Holders is to assess the cost-basis of each individual age-band subset within the cohort. We can consider these as a sort of fast-to-slow ribbon of cost basis levels, providing a sort of momentum indicator:

< 24hr: $89.9k

< 1wk: $87.6k

< 1m: $87.4k

< 3m: $94.6k

< 6m: $93.0k

A key takeaway from this insight is that most of the STHs who have held for at least 1 month are underwater on their position. Unrealized losses are permeating throughout the Short-Term Holder cohort, creating significant financial pressure and stress for investors.

Live Chart Unrealized Potential

In the previous section, we determined that a significant volume of Short-Term Holder coins are now held in loss. To complement this analysis, we can also evaluate the aggregate dollar value of unrealized losses (paper losses) held by these coins.

Using both of these metrics, we can better understand the magnitude of the financial damage held by recent buyers, and compare it across two related dimensions.

From the perspective of the unrealized loss metric (paper losses), Short-Term Holders are holding relatively elevated losses, being some of the largest of this cycle. However, the magnitude of paper losses remains near the upper-bound of values we have seen during most prior bull markets.

This suggests that whilst the financial stress investors are experiencing is meaningful, it is also not yet at levels which would be considered unexpected, or atypical for a bull market uptrend.

Live Chart

Bull markets have historically reached their zenith after the majority of the network wealth has been distributed from long-term tenured investors, to new and increasingly price sensitive speculators. These speculators eventually hold a majority of the supply at an elevated cost basis, making them highly sensitive to downside price action.

Presently, Short-Term Holders hold approximately 40% of the network wealth, after peaking at a value of 50% early in 2025. This peak remains notably lower than in previous cycles, where the wealth held by new investors peaked at around 70%-90% near the cycle peak.

There are a few potential explanations for this:

The 2023-25 cycle has thus far experienced more lengthy sideways periods of consolidation. This has allowed a progressive redistribution of supply, followed by investors becoming acclimated to new price altitudes.

Bitcoin in 2025 is better understood by both retail and institutional investors alike. As a result, Long-Term Holders may be more likely to hold onto more of their supply for a longer period of time, having developed a stronger conviction.

The presence of larger institutional investors, and the ETFs may have longer term time horizons and allocation preferences. As such, a larger proportion of the supply may be held for lengthy periods of time.

There are likely many factors influencing this dynamic, and it highlights and evolution in the Bitcoin investment thesis of both new and existing Bitcoin holders.

Live Chart Forging Long-Term Holders

Periods when the Bitcoin price rises significantly are often accompanied by an uptick in the intensity of sell-side pressure as investors take profit. Historically, Long-Term Holders have been the primary cohort capitalising on higher prices during bull markets.

A unique market dynamic is developing within the prevailing cycle, with oscillating waves of LTH distribution followed by periods of accumulation, creating a more controlled and stable market environment. There have been two main waves of distribution and accumulation thus far:

Distribution Wave 1: LTHs distributed -929k BTC

Accumulation Wave 1: LTHs accumulated +817k BTC

Distribution Wave 2: LTHs distributed -1.11M BTC

Accumulation Wave 2: Currently +278k BTC

Across the two distribution waves, over 2M BTC in sell-side pressure has been absorbed. Generally speaking, this volume of sell-side has been enough to conclude previous bull markets, however, the periods of following re-accumulation have acted to offset a large portion of the distribution thus far.

This balance between periods of distribution and accumulation may be a key factor giving rise to the orderly price structure we are experiencing, where price surges create intense distribution and profit taking, but are followed by side-ways price action as investors re-accumulate supply.

Live Chart

Further evidence to support a second wave of accumulation being underway can be found within the wealth held by coins aged 3m-6m. This is a very specific cohort as it exists at the transition boundary between the Short-Term Holder and Long-Term Holder cohorts. It captures the pool of supply which is most likely to migrate into LTH status over the coming weeks and months.

Presently, the 3m-6m cohort is experiencing a large uptick in total wealth held, suggesting that coins which were acquired when the market first traded up to $100k are starting to age into this bracket.

This group represents the top buyers who have not yet capitulated under the market conditions, underscoring a degree of investor confidence and patience. This behavior can be viewed as a precursor to Long-Term Holder supply growth, provided the cohort continues to HODL on.

Live Chart

Additionally, when we normalize the volume which is spent by this cohort, we can see that their spending activity is the most subdued in has been since the May 2021 downturn.

This confirms a dominance of inactivity amongst these investors, suggesting that the incentive to HODL remains quite strong, and many are undeterred by their paper losses and the volatile market conditions.

Live Chart

The flip side of these observations is that the Long-Term Holder cohort still retains a substantial portion of the network wealth, holding almost 40% of invested value.

These periods of HODLing and accumulation can create a gradual constriction of the supply-side, which over time, can create the conditions for a new wave of demand to establish the next uptrend.

Live Chart Summary and Conclusions

With the Bitcoin market trading within a new range between $78k and $88k. On-chain profit and loss taking events are declining in magnitude, highlighting a weaker demand profile, but also less sell-side pressure.

Short-Term Holders are currently experiencing a fairly significant degree of financial stress, with a large proportion of their holdings now underwater relative to the original cost basis. Whilst the STH cohort are dominating losses taken, the Long-Term Holder cohort are transitioning back into a period of accumulation, and we expect their aggregate supply to grow in the coming weeks and months as a result.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary

Liquidity continues to contract across on-chain and spot markets, with net capital inflows grinding to a halt, and exchange inflows slowing down.

Open Interest across futures contracts has pulled back, suggesting a reduction in hedging and speculative activity. Alongside this, an unwind in the cash-and-carry trade on CME Group futures appears to be underway, providing additional headwinds for market liquidity.

Key options metrics express a preference for downside risk aversion, with the implied volatility priced into put options resulting in elevated premiums.

Short-term investors are experiencing significant pressure to lock in losses. However, the incentive to capitulate remains somewhat less severe than in previous correction events and bearish periods.

Long-Term Holder activity remains largely subdued, with a notable decline in their sell-side pressure. This cohort still owns a comparatively large volume of network wealth for this stage of the cycle, creating an interesting dynamic moving forward.

💡 View all charts in this edition in  The Week On-chain Dashboard. Contracting Liquidity

The digital asset landscape has experienced strong downside pressure over recent weeks, with the Bitcoin price falling from $97k in late February, to $82k today.

A stark contraction in liquidity appears to be underway, and supports the decline in valuations. Net capital inflows into Bitcoin are grinding to a halt, with the Realized Cap growing at a rate of only +0.67% per month.

From this, we can draw two key observations:

As of now, there is a lack of fresh capital entering the asset to support higher prices.

Volatility expectations are elevated, as the market transitions from a profit-dominated regime, back towards a more neutral equilibrium position.

Live Chart

One method to measure and quantify active capital in the market is through the ‘Hot Supply’ metric. This supply volume represents the wealth held within coins aged one week or less and can be considered as a proxy for coins available and ready to transact.

The current wealth held by the Hot Supply cohort has declined from 5.9% of the circulating supply, to a value of just 2.8%. This represents more than a 50% contraction in liquid circulating coins, suggesting that there has been a decline in the appetite for trade and speculation.

Live Chart

A similar trend can be seen across inflow volumes to Exchanges, the central locations for trading activity. Inflows across all exchanges have declined from +58.6k BTC/day at the market peak to the current value of +26.9k BTC/day, a decline of over -54%. This aligns with the decline in aggregate investor sentiment and market capital flows noted previously.

There is also a similarity in the magnitude of contraction between the Hot Supply, and Exchange Inflows, providing a view of weaker overall demand-side pressure.

Live Chart Cash-and-Carry Unwind

Having assessed the on-chain landscape, we shall redirect our attention to the derivatives market, which experiences the highest trade volume of all market sectors.

Assessing the open interest in futures contracts, we can see a large decline taking place in recent months. Open interest has declined from $57B at the market ATH, down to a current value of $37B (-35%).

This highlights a net reduction in speculation and hedging activity, painting a similar dynamic to the dampened activity witnessed in various on-chain markets.

Live Chart

The introduction of US spot ETFs in 2024 provided institutional investors with the opportunity to put on regulated cash-and-carry trade positions. By pairing long-ETFs with a short-futures position via the CME Group exchange, traders can now arbitrage the oftentimes healthy price premium which exists between spot and futures markets.

Strong evidence for the cash-and-carry trade can be found by comparing the 30d flows into the US Spot ETFs and Open Interest across CME Futures contracts. Both of these metrics have experienced strong growth during the up-trending market between Oct and Dec 2024.

However, as long-side bias starts to soften in the market, an unwinding of the carry-trade appears to be underway. This has resulted in substantial ETF outflows, and the closure of a similar volume of futures positions.

Closing out these positions requires selling of the ETFs. Since the ETFs tend to trade with lighter volume than the futures markets, this can create additional headwinds for spot Bitcoin markets, whilst the futures markets are often large enough to absorb the additional volume.

Live Chart Demand for Downside Protection

As Bitcoin and the digital asset landscape continues to mature and institutionalize, the size of options markets continues to grow. This is largely due to the versatility of the instrument, allowing investors to deploy sophisticated strategies, and fine tune their risk management strategies.

One metric we can use to gauge institutional investor sentiment and risk appetite is the Volatility Smile, showing the implied volatility premium paid for different puts or calls at various strike prices.

Currently, we can observe a higher premium exists for puts, suggesting that downside protection is comparatively more expensive. This reflects a prevailing market sentiment where downside protection carries a premium.

Live Chart

We can also see this within the Options 25 Delta Skew metric, which evaluates the difference in implied volatility for puts and calls with the same delta.

We can see a sustained uptrend in delta skew for the 1-week and 1-month contracts, suggesting that puts are increasingly more expensive than equivalent calls. This again underscores risk-averse behavior, and a heightened demand for downside protection.

Live Chart Short-Term Holders Under Pressure

We have established that a broad contraction in liquidity is occurring across both the on-chain, and in derivative markets. In the next section, we will assess how this has affected Short and Long-Term Holder cohorts in the on-chain space.

A commonly used tool for assessing investor stress is the unrealized loss metric, which reflects the dollar value of paper losses held by investors. The recent downtrend has plunged a substantial number of Short-Term Holder coins into an underwater position, with their relative unrealized loss nearly reaching the +2σ threshold.

Despite these elevated paper losses, the financial damage carried by new investors remains largely in line with the yen-carry-trade unwind on 5-Aug-2024. It is also aligned with the upper-bound values we have seen in most prior bull markets.

The scale of unrealized losses is also considerably less severe than those experienced during the May 2021 sell-off, and in the 2022 bear market.

Live Chart

When evaluating the rolling 30-day sum of Short-Term Holder losses, we note that a large portion of new investors has capitulated under the immense drawdown pressure, with the current sell-off representing the largest sustained loss-taking event of the cycle ($7B).

Note again however, that the magnitude of losses is still far smaller than the previously mentioned capitulation events.

Live Chart Long-Term Holders Remain Calm

Switching our focus towards the Long-Term Holder cohort, we note that their spending pressure is beginning to wane. One way we can quantify this is by using the Binary Spending Indicator, which is designed to spot when Long-term Holders are spending a significant proportion of their holdings in a sustained manner.

We note that the Binary Spending Indicator has begun to slow down, and pull back. Long-Term Holder supply is also beginning to climb after several months of decline.

This suggests that there is a greater willingness to hold, than to spend coins amongst this cohort. This perhaps represents a shift in sentiment, with Long-Term Holder behavior moving away from sell-side distribution.

Live Chart

We can evaluate the percentage of the total Long-Term Holder balance sent to exchange addresses. By this metric, we can see a pronounced, but swift spike in distribution as the market traded down into the low-$80k range. This suggests that some long-term investors opted to de-risk, taking profits off the table amidst the uptick in volatility.

However, the intensity and magnitude of each distribution wave appears to be getting smaller. This perhaps alludes to a degree of saturation being reached amongst Long-Term Holders, where they have completed a majority of their sell-side activity within the current price range.

Live Chart

Bull markets are typically punctuated by intense sell-side pressure and profit taking from long-term investors, which is balanced by buy-side demand from new market participants.

The metric below assesses the cumulative profit realized by Long-Term Holders since the previous cycle ATH was broken. We can then quantify the sell-side pressure that each cycle has absorbed, providing a proxy for the demand-side which was required to absorb it and sustain the bull market.

Interestingly, the amount of profit realized by LTHs this cycle is within a similar range to previous cycles, evidencing the significant volume of sell-side pressure that the market has absorbed.

However, it is also worth noting that the LTH the cohort still holds a comparatively large amount of the total wealth, especially for this later-stage of the cycle. This interesting observation may indicate a more unique market dynamic moving forwards, as a relatively large pool of capital remains tightly held.

Live Chart Conclusions

A decline in speculation activity across digital assets is now apparent, with investors taking an increasingly risk-adverse stance. This is evidenced by the contraction in liquidity occurring across both on-chain and futures markets. Additionally, the options market continues to price a higher premium for downside protection.

When we look at the investor response to volatility, we see two divergent stories. First, Short-Term Holders are taking some of the largest losses of the cycle, reflecting a degree of fear. Long-Term Holders on the other hand, have slowed their spending, seeming to move away from sell-side distribution, and perhaps back towards patient accumulation and holding.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Overview

The Bitcoin market continues to navigate a complex landscape, with spot market strength contrasting with ETF outflows, declining futures activity, and weakening on-chain conditions. Options markets show heightened risk perception, while profitability and liquidity indicators suggest growing investor caution.

Spot markets have shown resilience, with rising price momentum and steady trading activity, though ETF flows have turned sharply negative, signalling institutional de-risking. Futures markets continue to weaken, with declining open interest, lower funding rates, and increasingly negative perpetual CVD, suggesting a continued unwinding of leverage. Meanwhile, Options market activity has surged, with volatility spread and 25 Delta Skew breaking above statistical highs, reflecting elevated hedging demand and market uncertainty.

On-chain activity remains subdued, as active addresses, transfer volume, and total fees continue to decline, signaling lower network engagement. Liquidity conditions are deteriorating, with realized cap growth slowing and hot capital share declining, suggesting weaker capital inflows and cooling speculative demand. Profitability metrics continue to slide, with percent supply in profit and NUPL nearing critical lower bands, while realized profit/loss has plunged below the long-term low, signaling intensifying loss realization and investor distress.

Overall, while spot markets remain stable, the broader market structure reflects a defensive stance, with ETF outflows, futures selling, and increased downside hedging in options markets reinforcing risk aversion. Without renewed liquidity inflows, Bitcoin remains vulnerable to continued downside pressure.

Off-Chain Indicators

On-Chain Indicators

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Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. 

Please read our Transparency Notice when using exchange data.

Executive Summary

Bitcoin entered a phase of strong investor distribution in early January, with the Accumulation Trend Score confirming persistent sell-side pressure.

Heightened volatility, weak demand, and liquidity constraints have prevented meaningful accumulation from restarting, reinforcing downside risks.

Panic-driven selling has intensified, with STH-SOPR spiking well below the break-even level of 1, signalling fear and loss realization among recent buyers.

A custom SOPR-adjusted CDD metric we developed shows that the intensity of the sell-off mirrors past capitulation events, notably the one in August 2024, as the market plunged to $49k.

💡 View all charts in this edition in  The Week On-chain Dashboard. Post-Euphoria Distribution

Bitcoin's cyclical behaviour is a product of both accumulation and distribution phases, with capital rotating between investor cohorts over time. The Accumulation Trend Score tracks these shifts, where values near 1 (dark purple) indicate substantial accumulation and near 0 (yellow) signal distribution.

The chart below shows how several accumulation cycles have been followed by distribution phases, which historically lead to weaker price action. The latest distribution phase commenced in January 2025, aligning with Bitcoin’s sharp correction from $108k to $93k.

The Accumulation Trend Score currently remains below 0.1, signalling persistent sell-side pressure is underway.

Live Chart

The Accumulation Trend Score measures the relative change in aggregate onchain balances. However, it is generally skewed by the behaviour of larger entities and does not reveal where Bitcoin was acquired. While it highlights overall accumulation or distribution trends, it lacks the granularity to pinpoint key cost-basis levels.

To gain deeper insights, we can turn to the Cost Basis Distribution (CBD) Heatmap, which visualizes where supply concentration has formed across different price ranges, helping us identify areas of potential support or resistance.

Market participants actively accumulated BTC during pullbacks between mid-December and late February, particularly in the $95k–$98k price range. This buy-the-dip behaviour suggests that investors still firmly believed in the bull trend, interpreting pullbacks as temporary pauses before further upside.

Live Dashboard

From late February onwards, as liquidity conditions tightened, confidence in accumulation started to deteriorate. External risk factors, including the Bybit hack and escalating U.S. tariff tensions, amplified market uncertainty and Bitcoin’s price trading below $92k. This level is crucial as it reflected the market breaking below the Short-Term Holder cost basis.

Unlike the earlier phase, there was no significant dip-buying response this time, indicating that sentiment had shifted toward risk aversion and capital preservation rather than continued accumulation.

The CBD heatmap confirms that as macro uncertainty increased, accumulation demand weakened, reinforcing that investor confidence is a critical driver of accumulation behaviour. The lack of dip-buying at lower levels suggests that capital rotation is underway, potentially leading to a more prolonged consolidation or corrective phase before the market finds a firm support base.

Live Dashboard Declining Demand Momentum

We have now used the CBD Heatmap and Accumulation Trend Score to highlight a lack of substantial accumulation since late February. We can diver deeper into this behaviour by analyzing the cost basis of two short-term holders (STH) sub-cohorts:

1w–1m holders – Investors who acquired BTC in the past 7 to 30 days.

1m–3m holders – Investors who acquired BTC between 1 and 3 months ago.

During periods of strong capital inflow, the cost basis of the 1w–1m cohort typically rises above that of the 1m–3m cohort. This signals that newer investors are buying BTC at a relative premium, reflecting bullish sentiment and positive momentum. However, in Q1 2025, this trend started to flatten out, marking an early sign of weakening demand in the immediate term.

With Bitcoin prices dropping below $95k, this model also confirmed a transition into net capital outflows, as the 1w–1m cost basis fell below the 1m–3m cost basis. This reversal indicates that macro uncertainty has spooked demand, reducing new inflows and arguably increasing the probability of further sell pressure and a prolonged correction.

This transition suggests that new buyers are now hesitant to absorb sell-side pressure, reinforcing the shift from post-ATH euphoria into a more cautious market environment.

Live Chart Sizing Up Fear

With the market undergoing a post-ATH distribution phase, it becomes crucial to gauge the extent of fear amongst the Short-term Holder cohort, especially those who entered most recently. Understanding this cohort’s behaviour helps market observers identify moments of extreme seller exhaustion, which have historically presented opportunities for longer-term investors.

A key metric for this analysis is the Short-Term Holder Spent Output Profit Ratio (STH-SOPR), which measures whether STHs are spending in profit (SOPR > 1) or at a loss (SOPR < 1).

Since prices dropped below $95k, the 196-hour moving average of STH-SOPR has remained below 1, suggesting that most short-term investors are realizing losses. In extreme moments, STH-SOPR dropped to 0.97 as the price crashed to $78K, underscoring the severity of capitulation.

This persistent downside momentum has left new investors on edge, leading to widespread panic selling at a loss. Such conditions often precede local seller exhaustion, a dynamic that long-term investors may monitor for potential re-entry opportunities.

Live Chart

Beyond tracking loss realization, another key metric for fear-driven sell-offs is Short-Term Holder Coin Days Destroyed (STH-CDD), which measures the economic weight of new investors’ spent coins by factoring in both the volume and holding time of the coin.

During sharp market downtrends, STH-CDD spikes as investors are on the verge of becoming long-term holders panic-sell, destroying a large wave of coin days. This signals short-term holders who endured prior uncertainty capitulate, potentially adding to downward pressure.

Live Chart

Combining these two concepts, we can construct an indicator that adjusts STH-CDD by incorporating profit/loss realization intensity, using the formula:

💡 ( SOPR_STH - 1) * CDD_STH

This metric refines STH-CDD by weighting it with the intensity and direction of realized profit or loss, providing a more precise signal of panic-driven sell-offs.

As shown in the chart below, the recent sell-off by top buyers has driven this indicator to -12.8K coin days per hour, reflecting intense loss realization and a moderate capitulation event. A similar pattern emerged in August 2024, when Bitcoin plunged to $49k amid market stress and macro uncertainty. The current structure suggests a comparable capitulation phase.

Live Chart A Compass in the Bear

With sell-side pressure dominated by investors who recently acquired coins at relatively high prices, it becomes insightful to gauge how deep the current bearish phase may get. To assess this, we will use various statistical bands based on the Short-term Holders' cost basis as a read on psychological fair value extremes.

The chart below presents the statistical high and low range of price deviations derived from these cost basis models.

Currently, the lower bound of this model—where short-term holders are deeply underwater—sits between $71.3k and $91.9k. Notably, this range aligns with the previously discussed liquidity gap between $70k and $88k, suggesting that the probability of forming a temporary floor in this zone is meaningful, at least in the near term.

Live Chart Summary & Conclusions

Bitcoin’s market structure has entered a post-ATH distribution phase, with weakness in aggregate demand and persistent sell pressure by recent top buyers. The Accumulation Trend Score has remained near 0.1 since early January, while the CBD Heatmap shows a fading buy-the-dip response from investors.

Using the cost-basis of Short-Term Holders, we can see that market momentum and capital flows have turned negative, signalling a decline in demand strength, and investor uncertainty is affecting sentiment and confidence.

A fear-driven capitulation of short-term holders is evident through STH-SOPR consistently trading below 1 and STH-CDD spiking. This local capitulation event also aligns with the market trading towards the lower statistical band, where recent investors are likely experiencing a high degree of financial stress.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Introduction

User retention is a fundamental measure of business health and a key success indicator for any industry with growth ambitions. It reflects how consistently users engage with a product or service over time.

For instance, a platform might report 100,000 weekly active users, but if 80% never return after their first interaction, its growth is unsustainable. Therefore, retention effectively encapsulates engagement, loyalty, and long-term viability, all of which directly impact profitability and sustainability.

Applying User Retention to Digital Assets

While retention is widely used to evaluate traditional products and services, its application to digital assets remains largely unexplored. Here, we introduce On-chain Retention, a novel framework for assessing user engagement with digital assets using blockchain data.

Specifically, we track on-chain address activity to measure how consistently users interact with or hold a specific asset over time. By analyzing this activity, we can determine whether holders return, remain engaged, or disengage entirely - insights that are otherwise difficult to capture in traditional financial markets.

On-chain retention offers a deeper lens into user commitment and helps investors and analysts detect fundamental behavioral patterns such as:

User Engagement: Identifies sustained interaction and interest in the asset.

Speculation vs. Genuine Demand: High churn after price spikes may indicate speculation, while stable retention suggests organic growth.

Conviction: Distinguishes between assets held with long-term belief versus those driven by short-lived hype.

Waning Interest: Declining retention can signal reduced relevance or diminishing utility.

Capital Flight: High churn may indicate users reallocating funds to other assets or markets.

Sell Pressure: Drops in retention may precede increased selling activity and potential price declines.

Competitive Analysis: Comparing retention across assets reveals shifts in sector-wide user preferences.

Stickiness: High retention reflects users' willingness to stay engaged within an asset’s ecosystem.

Sentiment: Serves as a proxy for investor confidence and community loyalty.

As digital assets gain mainstream acceptance and integrate rapidly into global business, measuring on-chain retention becomes increasingly important as it offers investors a fundamental perspective on engagement beyond price charts.

💡 Bottomline: On-chain retention provides deep insights into user commitment, speculation, and market trends, making it a critical new metric for digital asset analysis. Computing Retention for Digital Assets

To measure on-chain retention, we propose two complementary approaches: Activity Retention and Holder Retention. These methods track how users engage with a digital asset over time, either through transactions or by holding balances.

Activity Retention

Activity Retention measures how consistently addresses participate in transactions. An address is classified as active if it sends or receives a transaction within a given time window (here, we use 30-day intervals). Otherwise, it is considered inactive.

At any given point in time, we track the number of active and inactive addresses and analyze their transitions between these states. Figure 1. illustrates the possible transitions, categorizing addresses into four key cohorts:

New – First-time active addresses

Retained – Addresses that remained active across consecutive time windows

Resurrected – Previously inactive addresses that became active again

Churned – Previously active addresses that became inactive

For example, if an address was inactive in the last 30-day period but participates in a transaction during the current period, it is classified as resurrected.

Figure 1. – Transition states of Activity Retention Holder Retention

Holder Retention shifts the focus from transaction activity to asset balances. Instead of tracking whether an address is actively sending or receiving funds, this metric analyzes whether an address continues to hold a given asset over time.

Figure 2. illustrates the possible transitions. For example, an address that held an asset in the previous 30-day window and continues to do so is classified as retained. In contrast, addresses that previously held the asset but have since reduced their balance to zero are classified as churned.

Figure 2. – Transition states of Holder Retention

Note that, unlike Activity Retention, where state transitions are binary (active or inactive), Holder Retention allows for more nuanced behaviours. Since addresses can increase, decrease, or clear their balances within the same time window, additional classifications emerge. For instance, an address that acquires an asset and subsequently sells it within the same 30-day period falls into the "New & Churned" cohort.

Why Two Distinct Retention Metrics?

Activity and Holder Retention provide complementary perspectives on user engagement, each offering unique insights into how digital assets are used and held over time.

Activity Retention is particularly valuable for evaluating assets whose value is derived from utility, where sustained transaction activity signals continued adoption and relevance.

In contrast, Holder Retention reflects a long-term investment perspective, capturing the conviction of investors who choose to hold an asset over time. This is especially relevant for assets where ownership persistence can indicate confidence in the asset’s long-term value.

Given the diversity of digital assets, both retention models are essential for a comprehensive assessment. Depending on the use case - whether evaluating active participation or gauging investor commitment - analyzing both metrics provides a more holistic understanding of an asset’s fundamentals.

💡 Bottomline: Activity Retention is useful for measuring transactional behavior. Holder Retention reflects long-term investor conviction. Combining both provides a comprehensive understanding of asset fundamentals. A Look at the Data

Activity Retention provides key insights into the fundamental differences in how digital assets are used, as shown in Figure 3., comparing BTC and ETH. BTC exhibits high "new" and "churned" cohorts, reflecting the common practice of frequently creating and abandoning addresses for privacy. In contrast, ETH has a higher share of "retained" and "resurrected" addresses, underscoring the structural differences between UTXO and account-based blockchains.

Figure 3. – BTC and ETH Activity Retention

Figure 4 illustrates how price movements can impact Holder Retention. While market conditions naturally influence retention trends, this example highlights a distinct pattern, when a significant number of UNI holders churned amid the sharp price increase in late 2024, potentially indicating investors exiting positions.

Figure 4 – UNI Holder Retention 💡 Explore Holder Retention and Activity Retention Metrics for BTC, ETH, and all ERC20 tokens now in Glassnode Studio. Beyond Existing On-Chain Metrics

The concept of on-chain retention introduces a fundamentally different perspective compared to many existing on-chain metrics, which may appear similar at first glance but fail to capture user persistence over time.

Activity Retention vs. Active Addresses

Take Active Addresses, for example. This widely used metric tracks the number of unique addresses interacting with an asset within a given timeframe. However, it does not distinguish whether the activity comes from the same users or an entirely new set.

For instance, suppose Active Addresses show 100 users in two consecutive periods. On the surface, this suggests stable engagement. But if the composition of these addresses has completely changed - meaning the original users have all churned, replaced by entirely new ones - then user turnover is 100%.

This is where Activity Retention comes in. By tracking whether the same users remain active over time, it reveals true engagement and conviction - insights that Active Addresses alone cannot provide.

Holder Retention vs. Addresses with Balance X

A similar issue arises with metrics like Addresses with Balance X, which measures the number of addresses holding a given amount of an asset. While an increasing balance cohort might suggest accumulation, it fails to indicate whether the holders within that group are the same over time or if turnover is occurring, suggesting a lack of loyalty.

In theory, the entire set of holders could be constantly rotating - meaning, what appears to be a steady increase in a holding cohort might actually be a continuous churn of funds among different addresses. Holder Retention solves this by explicitly tracking whether specific addresses continue holding over time, distinguishing between committed investors and new entrants.

How Holder Retention Expands on HODL Waves

The closest existing metrics to Holder Retention are the metrics of the HODL Waves family, which quantify the supply that has remained unmoved for a certain period. Since it inherently tracks how long assets remain in addresses, it captures elements of retention.

However, Holder Retention goes further. While HODL Waves metrics only measure unmoved supply, Holder Retention also accounts for:

Resurrected holders – Addresses that previously exited but re-entered

Balance changes – Whether existing holders are increasing or decreasing their stakes

By providing these additional layers of insight, Holder Retention offers a richer, more nuanced view of user behaviour beyond just hodled supply.

Retention Metrics Live in Glassnode Studio

Retention metrics are now available in Glassnode Studio, providing deeper insights into user engagement, loyalty, and market sentiment. The initial release covers BTC, ETH, and all ERC20 tokens, with more assets to follow.

Explore retention analytics today to better understand long-term user behaviour in digital assets.

Executive Summary:

Digital Assets have experienced significant sell-side pressure in recent weeks, with Bitcoin tumbling by -28%, and Ethereum and Solana prices collapsing by more than -50% since their cycle highs.

As the market sells off, realized losses have increased massively, recording the second largest loss taking event of the cycle, and underscoring the severity of the correction.

The major digital assets did rebound briefly following the announcement of a Strategic Digital Asset Reserve by President Trump. However, this turned out to be another ‘sell-the-news’ event, with prices continuing to fall, and trading below their pre-announcement levels.

Strong confluence between price structure and key on-chain metrics indicate that the $92k remains a critical level for Bitcoin to re-establish upwards momentum, whilst the ~$70k level appears to be a key zone for the bulls to build support if reached.

💡 View all charts in this edition in  The Week On-chain Dashboard. Violent Volatility

Liquidity in the broader economy continues to contract, as evidenced by the multi-month uptrend in the US Dollar Index (DXY). As assets which trade 24/7, digital assets are often some of the first prices to respond to contractions in liquidity, often acting as a leading signal for other markets.

Over the weekend, President Trump announced that plans for a Strategic Digital Asset Reserve were underway, which would include BTC, ETH, SOL, ADA and XRP. This resulted in a brief, but strong resurgence of market strength, with prices rallying sharply.

However, in the days that followed, each asset largely retraced this move, turning into a classic sell-the-news event, as prices collapsed back below their pre-announcement levels.

Bitcoin remains the most resilient of the mix, with its deeper liquidity profile and market size making large market movements harder to achieve. However, both Ethereum and Solana, the second and third most prominent digital assets, experienced quite sharp devaluations, being down over 50% from their cycle highs.

Live Chart Volatility Releases

As demonstrated by this intense whipsaw in price action, this has led to very turbulent conditions over the last two weeks against a backdrop of an uncertain political environment.

We can see that realized volatility for Bitcoin surged across several time-frames. From this perspective, the 1-week and 2-week rolling windows have recorded some of the highest volatility values of the cycle so far, exceeding 80%.

Live Chart

On-chain data allows for a degree of clarity into the acquisition patterns of market participants. The URPD metric is a great tool, offering us a lens into the cost-basis clusters of the BTC supply.

Notably, the initial collapse in prices took the market below $86k, a zone where very few coins had previously changed hands. In a way, the market is testing to see whether the bulls are willing to provide demand support in this area, especially since so many coins have been acquired at prices above $90k, and are now holding an unrealized loss.

Live Chart

Between Feb 26th to March 3rd, over 150k coins (0.76% of the circulating supply, and equivalent to $14.2B in value), were acquired within this ‘air-gap’ region below $86k.

Prices are beginning to trend back towards the upper bound of this zone, and it remains to be seen if investors from the large cluster above $90k are going to take this rally as an exit liquidity opportunity, and cut their losses.

Live Chart

The Realized Supply Density metric quantifies the magnitude of supply concentrated around the current spot price within a ±10% price move. When supply is highly concentrated around the spot price, small movements can significantly affect investor profitability, which in turn can amplify market volatility.

Under these assumptions, we can observe how the supply previously concentrated within a tight price range responds to heightened volatility. As prices sold off, the realised supply density plummeted, signalling a very large shift in investor profitability had occurred.

This metric highlights the violence of the volatility experienced by the market, which may impact investor sentiment moving forward.

Live Chart Inspecting the Damage

Despite Bitcoin holding up better relative to the other major assets, the recent sell-off has still been the second largest weekly decline of this cycle. The market sold off -13.9% over the last week, bested only by the yen-carry-trade unwind event that occurred on 5-Aug-2024.

Live Chart

Despite the severity of the correction, the magnitude of the drawdown remains in line with previous drawdowns this cycle, with Bitcoin trading -28% below its ATH. This highlights the relatively robust demand picture Bitcoin has seen during the 2023-25 uptrend, which has been characterised by shallower drawdowns when compared to prior cycles.

Whilst -28% is a large drawdown in 2023-25, a typical drawdown in 2017 was over -30%, and the 2019-21 cycle saw multiple -50% declines.

Live Chart Blood in the Streets

When the Bitcoin market sells off, valuable insights can be drawn from studying the reaction of investors. This helps us better understand behavior patterns, and any shifts in aggregate sentiment.

We can see a notable uniformity in the accumulation and distribution behavior across varying wallet sizes. Over the last two months, all wallet size cohorts have engaged in heavy distribution, providing enormous sell-side pressure to the market.

The intensity of this sell-side pressure has heightened since mid-January, contributing to the recent weakness in the market.

Live in Engine Room

A significant proportion of this sell-side has originated from coins which are locking in a loss. The Realized Loss across all market participants hit $818M/day this week, with only the yen-carry-trade unwind on 5-Aug-2024 recording a larger value ($1.34B).

This showcases that this market downturn has been a challenging environment for investors, with many exiting the market below their cost basis under the pressure of the drawdown.

Live Chart

From the perspective of the SOPR metric, which assesses the average profit/loss multiple locked in across investors, we note the first period of loss dominance since Oct 2024.

However, the structure still appears constructive if SOPR finds support at the break-even level of 1.0. Swift and short undercuts at the equilibrium level of 1.0 suggests that investors are buying and defending their cost-basis, which is a typical characteristic of bull markets.

Live Chart

In addition, the Short-Term Holder cohort, a proxy for new demand in the market, has recorded its second largest negative SOPR print of the cycle, again highlighting the exceptionally challenging market conditions for new investors to navigate.

This suggests that new investors have locked in substantial losses this week, and may be a sign of a significant inflection point in investor sentiment.

Live Chart Maintaining Momentum

We will now turn to an assessment of both price action, and how the market is trading relative to key cost basis levels, derived using on-chain data.

Assessing the price structure over the last few months, we note three key pricing points:

The initial range breakout at $70k in November 2024.

A significant surge in price as the market crossed $80k.

Consolidation phase, with a range low of around $90k.

Live Chart

The Short-Term Holder cost basis has historically acted as an important reference level across bull-market uptrends. We have calculated the ±1σ bands of the Short-Term Holder Cost-Basis, which have typically acted as a sort of upper and lower bound for local price action.

At the moment, these levels are trading at:

Short-Term Holder Cost-Basis +1σ: $130k

Short-Term Holder Cost-Basis: $92k

Short-Term Holder Cost-Basis -1σ: $71k

This week, the spot price has sold off below the Short-Term Holder Cost-Basis, and is currently trading between this level, and the lower -1σ band.

Live Chart

The Active Realized Price can help bolster this assessment. The Active Realized Price provides a more true-to-life estimation of the cost-basis for active investors. With 50% of trading days above and below the Active Realized Price, one can consider this level as a key threshold separating a bull and a bear market.

The Active Realized Price is trading at $71k, which is aligned with the STH-CB lower band, as well as the lower bound of the air-gap discussed in the URPD metric earlier. With significant confluence across several key cost basis metrics, this price region becomes an area of interest, perhaps being the final defence line for the bulls in the event of a complete capitulation.

Live Chart Summary and Conclusions

The coiling of volatility over recent months has led to a widespread price contraction across all digital assets. This has precipitated significant loss taking events, and marks the second largest capitulation event of our current cycle.

For the Bitcoin market, decisive reactions around Short-Term Holder Cost-Basis at $92k appear to be a key level to monitor for local momentum. If the market deteriorates further, the $71k region is a key area of interest. It aligns with several technical, and on-chain metrics alike, making it an important level for the bulls to defend should it be reached.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

In our previous article on the practical applications of the Cost Basis Distribution metric (CBD), we explained the concept of cost basis lines to show how investors increase or decrease their cost-basis.

This week, we’ll look at how sharp shifts in supply at certain price levels reflect investors throwing in the towel - often a key indicator of a local market bottom.

Cost Basis Distribution - A Quick Recap

CBD reflects the total supply held by addresses with an average cost basis within specific price buckets. This, in effect, gives a clearer view of how investors’ cost bases shift over time due to buying or selling activity and allows mapping out the behaviour of market participants over time.

Tracking these upward and downward shifts helps us understand not only the sentiment behind buying and selling decisions, but also potential inflection points, where the market might pivot.

💡 Our Heatmap Dashboard now provides in-depth insights across hundreds of tokens. Access it here. How to read CBD Heatmaps:

Color Intensity (Supply Distribution): A color scale - from cooler shades (lower supply) to warmer shades (higher supply) - shows where the token supply is concentrated. Example: A red band means a high supply at that particular price range. A green or blue band indicates a smaller supply.

Vertical Axis (Cost Basis): Each horizontal “slice” corresponds to a price range at which some portion of the token supply last moved.

The Psychology of Market Bottoms: A Hypothesis

Market behavior is often shaped by the intense psychological pressure experienced by investors who are deeply underwater on their positions. Across various assets - such as Uniswap (UNI), Maker (MKR), and AIOZ analyzed below - we frequently observe that holders with significant unrealized losses tend to capitulate near local or global bottoms.

This pattern suggests that forced selling, driven by emotional and financial distress, plays a key role in shaping market reversals.

Visualizing Capitulation in Action

Uniswap: Supply Redistribution at Local Bottoms

The Uniswap chart below illustrates a common CBD trend:

Supply originally accumulated near the $15 peak gradually shifts from warmer to cooler colors over time.

This color transition visually represents distressed investors selling their holdings at lower prices - a classic sign of capitulation.

As this supply changes hands at depressed levels, it often finds buyers willing to step in, potentially forming a local bottom.

Supply originally created at $15 gets gradually distributed as prices trend lower. 💡 View live Uniswap CBD Heatmap here. Maker: Repeating the Pattern

A similar pattern emerges with Maker (MKR):

Supply that was previously accumulated at a local top is eventually capitulated at lower price levels.

As market participants under extreme pressure liquidate their positions, we again see a turning point forming - suggesting that capitulation often coincides with local bottom formation.

MKR supply accumulated during April 2024 local top is capitulated during Nov bottom 💡 View live Maker CBD Heatmap here. AIOZ: From Confidence to Capitulation

Initially, AIOZ holders appeared confident near the $1 mark, steadily accumulating as prices hovered around a local peak. However, as the market began to decline, sentiment shifted dramatically:

A wave of selling emerged, with investors gradually offloading their positions at each successive price drop.

This progressive unwinding reflects a classic capitulation phase, where financial and emotional strain lead investors to "throw in the towel."

As forced selling exhausts itself, market conditions may stabilize, potentially setting the stage for a turning point.

Progressive unwinding of a large supply cluster during a bottom 💡 View live AIOZ CBD Heatmap here.

This pattern highlights the psychological cycles at play in the market - confidence at the top, distress-driven selling at the bottom, and eventual opportunities for contrarian buyers.

Why This Matters

Understanding these cycles of forced selling helps us identify potential inflection points in the market. When capitulation reaches its peak, supply transitions from weak hands to stronger hands, creating opportunities for contrarian buyers who recognize the psychological dynamics at play.

By tracking these behavioral shifts, we can gain a deeper understanding of how and when local bottoms might form across different assets.

Identifying Local Bottoms: A Data-Driven Approach

Market bottoms are often formed during periods of extreme distress - when forced selling reaches its peak and exhausted sellers finally capitulate. By identifying these zones of maximum pain, we can better understand where local bottoms might emerge.

To quantify this dynamic, we introduce a capitulation metric based on Cost Basis Dynamics (CBD) data. This metric aims to measure investor pain more accurately than traditional realized loss indicators.

Constructing the Capitulation Metric

Our approach to defining capitulation incorporates three key elements:

1. Weighted Sell Volumes

Not all losses are felt equally. A trader selling at a 50% loss experiences significantly more financial and emotional pressure than one selling at a 10% loss. To account for this, we apply a quadratic function to the difference between the average cost basis and the current market price. This weighting system amplifies severe losses, making them more prominent in our metric.

2. Smoothing for Clarity

Market data is noisy, and short-term fluctuations can obscure meaningful trends. To filter out this noise, we apply a 7-day exponential moving average (EMA) to the weighted sell volumes, allowing us to focus on sustained periods of distress rather than isolated events.

3. Non-Linear Economic ‘Pain’

Traditional realized loss metrics treat all losses proportionally in nominal terms. However, in reality, investors experience losses non-linearly—a deep drawdown feels exponentially worse than a minor dip. Our capitulation metric adjusts for this by emphasizing larger losses through quadratic weighting, better capturing the psychological burden of extreme sell-offs.

Visualizing Capitulation: What the Data Reveals

When plotted in red, the capitulation metric frequently spikes near major price lows, shown in blue. We observe this pattern consistently across a selection of cryptocurrencies, including Uniswap (UNI), Maker (MKR), MATIC, and LINK.

These spikes indicate moments when heavily underwater investors finally capitulate - selling at deep losses, often in response to panic or liquidations. Historically, such points have often marked local bottoms, presenting potential buying opportunities for risk-tolerant investors.

Capitulation metric spikes are inversely correlated with price Why This Matters Identifying Turning Points

By pinpointing zones of maximum pain, this metric offers a systematic way to identify local bottoms, where forced selling is likely reaching its final stages. This can be particularly useful for traders seeking high-risk, high-reward entry points.

Understanding Investor Psychology

Market cycles are driven by sentiment as much as fundamentals. This metric provides a quantifiable measure of capitulation, revealing when investors have lost confidence or exhausted their capital. These psychological turning points often coincide with market inflection points, where sentiment and price action begin to shift.

Conclusion

By refining how we measure market distress, the capitulation metric provides valuable insights into local bottom formation. While no single indicator guarantees precision, combining this with broader market context and technical analysis can improve timing for entries in volatile conditions.

Do you want to get access to the source code?

Attached you will find the Google Colab Notebook of the capitulation metric. You just need to plug your API key and run the notebook.

Executive Summary

Bybit suffered one of the largest hacks in crypto history, losing 403,996 ETH (~$1.13B) from its cold wallets due to a smart contract exploit. This breach led to panic withdrawals, with total exchange outflows reaching approximately $4.3B across Bitcoin and stablecoins.

Market sentiment deteriorated rapidly, triggering a broad sell-off. Bitcoin monthly performance dropped to -13.6%, while Ethereum (-22.9%), Solana (-40%), and Meme Coins (-36.9%) erased months of gains, resetting market momentum to April 2024 levels.

The price drop pushed Bitcoin back into the realized supply “air gap” between $70K and $88K, a zone with a low-cost basis density. Initially driven by long-term holder sell-offs, this weakness was exacerbated by the Bybit hack, increasing downside momentum.

As a result, short-term holders are under severe pressure, with STH-MVRV at 0.95, meaning recent investors are 5% below their cost basis. Their profitability has declined 15.8% from the median, signalling significant unrealized losses.

STH-SOPR dropped -0.04 below its quarterly median, well beyond the one standard deviation threshold (-0.01), indicating short-term holders are realizing significant losses. Historically, this has triggered temporary market pauses, but a lack of demand-side momentum could extend the current downtrend.

💡 View all charts in this edition in  The Week On-chain Dashboard. A Historic Hack Shakes the Market

On February 21, 2025, the market was rattled by one of the largest exchange hacks in crypto history, as Bybit suffered a massive security breach. The attacker drained 403,996 ETH (~$1.13 billion) from the platform’s Ethereum cold wallet, exploiting smart contract permissions to reroute funds to an unidentified address.

Live Chart

Bybit CEO Ben Zhou explained that the attack was executed through a "Musked UI," where a fraudulent interface deceived signers into approving a malicious transaction. Despite the severity of the breach, Bybit assured users that other cold wallets remained secure and withdrawals were still operational.

The hacker's transactions revealed that the stolen assets were not limited to Ethereum, with substantial losses across multiple assets:

Ethereum (ETH): 403,996 ETH hacked

Staked Ethereum (stETH): 91,076 stETH hacked

mETH: 8,000 mETH hacked

cmETH: 15,000 cmETH hacked

With nearly $1.48B in stolen funds, the hack left the market on edge, triggering concerns over exchange security, fund safety, and potential market-wide sell pressure.

Live Chart Market Fallout and Exchange Outflows

Following the hack, the market reacted with heightened volatility and panic withdrawals, leading to a significant decline in Bybit’s reserves as users rushed to secure their assets.

By February 24, 2025, Bybit’s BTC, USDT, and USDE reserves experienced substantial outflows:

Bitcoin (BTC): 21,248 BTC net outflow (70,604 BTC → 49,356 BTC)

Tether (USDT): $1.76B USDT net outflow (3.25B → 1.50B USDT)

USDE: $217.47M USDE net outflow (578.37M → 360.90M USDE)

These figures illustrate the liquidity drain across Bybit, reinforcing broader concerns over centralized exchange security.

Live Chart Outflows Peak

By February 24, 2025, Bybit’s reserves of major assets - including Bitcoin and stablecoins - dropped from $10.8B at the time of the hack to $6.5B, highlighting a cumulative outflow of $4.3B. While the initial wave of panic-driven withdrawals was severe, the rate of outflows has since moderated, suggesting a gradual stabilization.

At the same time, Ethereum reserves - including both native ETH and staked ETH - rebounded to $1.19B, aided by Bybit’s efforts to replenish holdings. ETH price action remained weak, declining to $2,490, while a subsequent ~$117M outflow after the buyback suggests that investor confidence is still fragile.

Live Chart Ethereum Reserve Recovery

By February 26, 2025, Bybit received a total Ethereum inflow of $1.58B, with $802M (50.7%) originating from just eight large transactions.

These inflows suggest a deliberate effort to replenish reserves, likely through intra-exchange transfers, strategic acquisitions, or external deposits from institutional liquidity providers.

Live Chart

While Bybit worked to replenish its Ethereum reserves, Bitcoin outflows from the exchange have been substantial. Since the time of the hack, Bitcoin outflows totalled $2.47 billion, with 47.2% ($1.16B) exiting via five large transactions.

Live Chart

A similar wave of outflows occurred with Tether (USDT). Over the same period, outflows reached $2.25 billion, with 38.1% ($854M) via eight large transactions.

Live Chart

By analyzing Bybit’s Ethereum replenishment efforts alongside significant Bitcoin and Tether outflows, we gain insight into how the exchange - and, by extension, larger entities - responded to one of the largest hacks in crypto history.

Market Turmoil Following the Hack

As the fallout from the Bybit hack unfolded, the market reacted with heightened volatility and a sharp downturn. With declining liquidity across the market and spot demand cooling down, sell pressure intensified, triggering a broader correction.

The intensified market-wide weakness led to Bitcoin price monthly momentum plunging by -13.6% while Ethereum and Solana saw even steeper declines of -22.9% and -40%, respectively. The Meme Coin Index also collapsed by -36.9%, underscoring the sharp risk-off sentiment.

This downturn has reversed months of positive price uptrend, bringing the momentum back to levels last seen in April 2024. The scale of the decline highlights broader fragility in market confidence following the recent ATH in December 2024.

Live Chart Bitcoin Re-Enters a Low-Liquidity Zone

The Cost Basis Distribution (CBD) heatmap illustrates how Bitcoin’s December 2024 ATH created an air gap in realized supply between $70K and $88K. During strong trends, price appreciation tends to outpace capital inflows, leading to lower realized supply concentration in these ranges.

As the market rallied to new highs, long-term holders began distributing supply, weakening price momentum. The Bybit hack further intensified this downtrend, pushing Bitcoin back into the low-liquidity air gap shown in the following chart. With price now retesting this zone, the market is seeking demand, as further downside could trigger heightened volatility and additional sell pressure.

Live Dashboard Short-Term Holders Under Pressure

With Bitcoin plunging to $87K, now 20% below its ATH of $109K, recent investors are experiencing severe psychological stress as the price trades ~5% below their cost basis (STH-MVRV = 0.95).

Adjusting STH-MVRV, we observe that new investor profitability has declined -15.8% from its quarterly median, falling below the one standard deviation threshold (-11%). This signals significant unrealized losses, a condition historically leading to capitulation events or forced sell-offs during market downtrends.

Live Chart Short-Term Holders Begin Realizing Losses

To further analyze new investor reactions, we turn to STH-SOPR (Spent Output Profit Ratio), which measures whether short-term holders are selling at a profit or loss.

STH-SOPR has dropped by -0.04 below its quarterly median, significantly under the one standard deviation threshold (-0.01).

This suggests a notable increase in loss realization, as many recent buyers are exiting positions at a loss.

Historically, deep SOPR contractions have led to at least temporary market stabilization as weaker hands exit. However, under current macroeconomic conditions, the risk remains that the price decline could extend further if no strong demand catalyst emerges.

Live Chart Conclusion & Summary

A broad market correction following the Bybit hack pushed Bitcoin’s monthly performance down to -13.6 %, while Ethereum, Solana, and Meme Coins suffered even steeper losses, resetting market momentum to April 2024 levels.

As Bitcoin retraced into a realized supply “air gap,” short-term holders faced mounting unrealized losses. Accordingly, STH-MVRV and STH-SOPR edged down below their statistical low bands, showing significant loss realization by new investors due to declining profit margins.

If demand fails to recover, further downside risk persists, making the coming weeks critical in determining whether Bitcoin stabilizes or capitulation deepens.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

In our ongoing mission to push the boundaries of on‑chain analytics, we are excited to announce the expansion of Cost Basis Distribution (CBD) coverage beyond Bitcoin – now incorporating Ethereum (ETH), ERC‑20 tokens, and SPL tokens.

This marks a significant leap in visibility over how investors position themselves across multiple asset classes – shedding light on market conviction, capitulation, and the evolving cost basis of investors.

Below, we revisit what CBD is, why it is such a powerful analytical framework, and how these newly released datasets can deepen your understanding of on‑chain dynamics for a variety of assets.

Recap: What is the Cost Basis Distribution (CBD)?

Cost Basis Distribution maps out at what price levels the current supply of a given asset was last transacted on‑chain. In simpler terms, it shows how many tokens (the supply) changed hands at each price point throughout history, overlaying that information with the current market price.

Investor Positioning and Market Structure: CBD captures investor behavior, revealing how many coins have a ‘cost basis’ around each price level. By doing so, it provides a transparent view of where key support/resistance clusters might form.

Confidence and Capitulation: CBD can help identify when investors are accumulating coins on the way up (increasing cost basis), or averaging down when prices slide (decreasing cost basis). Such patterns can highlight confidence (buying despite lower prices) or capitulation (when we see drastic changes in supply at certain price level).

💡 Our Heatmap Dashboard now provides in-depth insights across hundreds of tokens. Access it here. Reading the CBD Heatmaps

The CBD Heatmaps are your key to understanding where and when investors are positioned in the market. Here's how to understand the data:

Color Intensity (Supply Distribution): The color scale – from cooler shades (lower supply) to warmer shades (higher supply) – shows where the token supply is concentrated. A red “band” signals high supply at that particular price range. A green or blue band indicates lesser supply.

Vertical Axis (Cost Basis): Each “horizontal slice” corresponds to a price range at which some portion of the token supply last moved.

Example below: In October 2024, there was a significant accumulation of Bitcoin between $60K and $65K, represented by deep orange shades indicating a high supply concentration. As the price began rising in November, these shades gradually shifted from orange to yellow and then to green, signaling that investors who purchased at $65K were taking profits and distributing their holdings as the price moved upward.

Fading color intensity showing distribution from investors bought at $65K

Cost Basis Lines: Cost basis lines represent how much, on average, investors have paid for their holdings over time. When these “stair-step” lines move up, it generally indicates that market participants are buying an asset as prices rise, thereby increasing their average cost basis. This often signals strong conviction or a belief that the asset is not yet overpriced - investors are willing to keep accumulating despite higher prices. See the Bitcoin example below:

The cost basis lines moving up show investor conviction

Conversely, when the lines move down, it means that investors are buying while prices decline, effectively lowering their average purchase price. This behavior can reflect a “buy-the-dip” or DCA mindset: market participants see value in adding to their positions even as the market moves lower, suggesting they believe the asset remains fundamentally strong or undervalued. See the example below with Maker:

Cost basis trending down over time suggests investors buying the dip Why This Framework Matters and How to Use It

Cost basis behavior offers a window into the collective mindset of investors, showing how they adjust and reaffirm their convictions as the market moves. Tracking these upward and downward shifts helps us understand not only the sentiment behind buying and selling decisions, but also potential inflection points, where the market might pivot.

Here are specific use cases that make this framework a powerful and versatile tool in an investor's toolkit - now applicable across assets at different points on the risk spectrum.

Gauging Investor Sentiment

Changes in cost basis help illustrate broader market psychology. A rising cost basis during a rally often signals optimism; if investors continue buying despite higher prices, it underscores confidence in the asset.

Assessing Conviction

When you see investors continuously lowering their cost basis on a declining price trend, it suggests a high level of conviction; they are willing to commit additional capital despite short-term negative price action. Conversely, if cost basis stays flat or does not increase significantly during a price uptrend, it can indicate a more cautious stance from the market.

Risk Management

For traders and analysts, monitoring cost basis can help gauge where the bulk of the market sits in terms of unrealized gains or losses. Knowing whether most investors are “in profit” or “underwater” can inform decisions about potential selling pressure or accumulation points.

Access the Data via API

We’ve made these expanded datasets easily available through the Glassnode API, allowing you to integrate Cost Basis Distribution directly into your own research platforms and dashboards. Whether you prefer Python, R, or building a web application, direct API access ensures data timeliness and flexibility.

Stay Tuned for More CBD Updates!

In the next article, we will showcase practical examples of metrics built directly from the raw CBD data. You’ll see how to craft visualizations and create proprietary indicators that speak to your specific trading or investment thesis.

Executive Summary

After Bitcoin’s second attempt to break above $105k in late January, the market has entered a contraction phase, with monthly price momentum sharply declining across major assets.

Bitcoin has held relatively steady, while Ethereum, Solana, and Memecoins have faced much deeper corrections, reflecting a shifting appetite for risk.

Solana has emerged as a market leader in capital inflows over the past two years, in contrast to Ethereum, which has comparatively struggled to attract sustained demand.

However, this week, all digital assets aside from Bitcoin have seen a dramatic decline in capital flows, with Solana, and its associated memecoin ecosystem taking a relatively large hit.

Perpetual futures open interest has declined across Bitcoin (-11.1%), Ethereum (-23.8%), Solana (-6.2%), and Memecoins Index (-52.1%), reflecting a diminished appetite for leveraged speculation.

💡 View all charts in this edition in  The Week On-chain Dashboard. Market Momentum Takes a Breather

The Bitcoin market attempted to rally above the ATH, and back into price discovery in late January 2025. This rally, however, could not achieve the necessary momentum, and the market has entered into a period of contraction and consolidation since then, with price momentum sharply declining across major assets.

Bitcoin: +48.4% (Nov 2024) → -5.9% (Feb 2025)

Ethereum: +60.3% (Dec 2024) → -16.9% (Feb 2025)

Solana: +53.2% (Nov 2024) → -33.1% (Feb 2025)

Meme Coins Index: +90.2% (Dec 2024) → -37.4% (Feb 2025)

Notably, Memecoins and Solana have thrived during strongly trending market conditions but also tend to correct sharply during downturns. Ethereum has remained one of the weakest performers throughout this cycle, and whilst it has outperformed Solana this week, a robust trend of out-performance has not yet been established.

Live Chart Assessing Performance So Far

The recent slowdown comes after an extended period of strong gains across the major digital assets. Looking at the performance since early 2023, we can see clear differentiation in how each asset has navigated the cycle so far:

Bitcoin is trading within a range approximately 3.4x higher than April 2023, providing a benchmark return profile.

Ethereum has struggled compared to its peers, ranging between 1.3X and 2.0X relative to April 2023.

Solana's returns since 2023 peaked at 11.8x in early January 2025, but have since dropped sharply to around 7.6x as the current correction took hold.

Memecoins Index: Saw an explosive uptick in prices in mid-2024, largely aligned with Solana’s out-performance, and peaking 5.2X since 2023. However, recent weeks have seen this sector get hit quite severely, with total performance now being the worst out of the four assets.

This provides a view of Solana’s high-beta nature, where it has experienced both the strongest upside and also the sharpest corrections. Bitcoin’s steadier trajectory highlights its resilience as a benchmark return profile for the digital asset space. Memecoins, in particular, have seen a marked decline in investor demand of late, suggesting there has been a change in risk appetite.

Live Chart Capital Flows Drive Markets

The strong out-performance of Solana over the last two years aligns with a persistent capital inflow from investor demand. Looking at the monthly change in the realized cap, we can see clear patterns in capital movement across various digital assets:

Solana: Has consistently attracted higher relative capital inflows, supporting its strong price appreciation.

Ethereum: Has seen the weakest capital net inflow out of the majors, explaining its relative underperformance.

Memecoins: Experienced several abrupt but unsustainable surges in capital inflow, reflecting speculative bursts, but without sustained momentum.

However, in recent weeks, the momentum of capital inflows has declined for all digital assets. Notably, Ethereum and Top Memecoins have now flipped negative (capital outflows), with Ethereum facing a -0.1% net outflow from the Realized Cap and Memecoins Index seeing an even sharper -5.9% outflow.

This signals a meaningful cooling down in speculative appetite and alludes to a potential for capital rotation out of riskier assets on the road ahead.

Live Chart Weakness In Futures Markets

As momentum starts to fade in spot markets, we can also see a decline in capital inflows within the perpetual futures market. The cooling of demand on the spot side has led to a sharp drop in perpetual open interest (OI) across all major assets, signalling a reduction in speculative activity and lower cash and carry yields.

Over the last 30 days, the rate of change in open interest highlights a widespread retreat of capital:

Bitcoin OI: -11.1%

Ethereum OI: -23.8%

Solana OI: -6.2%

Memecoins OI: -52.1%

This trend of declining open interest across the board suggests that speculators are reducing their leveraged exposure, likely in response to weaker market momentum and increasing market uncertainty. The most extreme decline is seen in Memecoins, which tend to attract more short-term leveraged bets but lose traction quickly whenever sentiment weakens.

Live Chart Funding Rates Signal Bearish Sentiment

The weakening in open interest is further reinforced by a decline in perpetual futures funding rates. This reflects a shift toward more bearish sentiment and an unwinding of leveraged positions, particularly in riskier assets.

Bitcoin and Ethereum funding rates remain slightly positive, and their deeper liquidity profile tends to see positive funding rates except during sharp leverage wash-out events.

Solana funding rate have edged lower and have traded negative in recent weeks, signalling a cooling off of demand for long speculative positions.

Memecoins have seen funding rates turn very negative, indicating that shorts now dominate in these highly speculative assets, and many traders are closing their positions (or being liquidated).

Negative funding rates for Solana and Memecoins suggest a net shift towards bearish sentiment in higher-risk assets and a closing out of excessive long-sided leverage.

Live Chart ETF Flows and Market Impact

With the market in a contraction phase, institutional interest in Bitcoin and Ethereum has slowed based on spot ETF flows. By normalizing net inflows against each asset’s native spot volume, we can gauge the weight and influence of the ETFs on market dynamics.

Bitcoin ETFs saw several outflows exceeding $200M/day last week, however this was followed by a strong rebound in buy-side activity, exceeding 8% of global spot volume, and highlighting institutional demand (akin to ‘buy the dip’ behavior).

Ethereum ETF demand has cooled significantly and remains much smaller in scale compared to Bitcoin. ETF activity for ETH is hovering close to zero in terms of net flows in and out, suggesting a lack of strong traditional investor demand and participation.

This divergence has been a theme of this market cycle thus far and reinforces Bitcoin’s dominant role within the institutional asset mix. Ethereum continues to struggle to attract large, sustained inflows, which further explains its relative underperformance in recent years.

Live Chart A Key Bull-Bear Threshold

Bitcoin is currently trading $1k-$5k above the Short-Term Holder (STH) cost basis, located at $92.5k. Historically, this level has served as a key pivot point between local scale bull and bear phases, being the pivot point where the average recent buyer moves between a state of unrealized profit and loss.

Reviewing previous instances where Bitcoin reached a new ATH and then corrected lower, we can see a similar pattern in May 2021, Nov 2021, April 2024, and Feb 2024.

In each of these cases, the downtrend extended toward the lower band of the STH cost basis model, specifically -1 standard deviation (σ) below the cost basis. Currently, this lower band sits at $71.6K, helping frame up the potential downside risks should these historical patterns repeat.

Live Chart Post ATH Consolidation

In prior instances where Bitcoin has reached a new ATH, we observe a consistent post-rally pattern, where a surge in realized supply density occurs within ±15% of the spot price. This results from the market transitioning from an aggressive uptrend into price consolidation, as the market trades within a relatively narrow range.

This behaviour is evident in previous cycle tops, where:

As the market rallies within price discovery, the realized supply density crashes lower all the way up to the price peak.

Market participants then begin redistributing coins as the market enters a correction or consolidation phase.

This often occurs close to the STH cost basis, as the conviction and demand profile of new investors is tested.

The current realized supply density aligns with a typical post-ATH consolidation phase, where buyers and sellers try to establish a new equilibrium before the next major trend unfolds.

Live Chart Approaching a Decisive Market Moment

To better understand how sensitive the market is due to this supply density, we can analyze the supply held by short-term holders (STH) in recent post-ATH distribution phases. This helps gauge the patterns of new investor accumulation and whether current conditions resemble past cycle peaks.

When comparing STH supply changes, we observe:

The recent accumulation phase closely mirrors May 2021, suggesting a similarly large amount of supply, and investors will be sensitive to a price decline below $92.5k.

In April 2024, new investors also accumulated aggressively, but the magnitude of the STH supply uptrend in the current cycle structurally aligns more with May 2021 rather than 2024.

Given these similarities, we are now very close to a decisive moment in the market—a phase where price action is primed for uncoiling. If demand remains strong, Bitcoin could establish a new range above ATHs. However, a lack of sustained buy pressure could lead to a deeper distribution-driven correction, similar to prior post-ATH phases. This would likely be driven by panic amongst recent buyers who see their recently acquired coins move from being in profit to holding an unrealized loss.

Live Chart Conclusion & Summary

Bitcoin has been consolidating around $95k for several weeks and is trading within a relatively stable range. The same cannot be said for the wider digital asset landscape, with Ethereum, Solana, and Memecoins all seeing significant drawdowns from their cyclical highs. In particular, Memecoins have seen a significant cool-off of demand, as evidenced by capital outflows, sharp price declines, and bearish sentiment in futures markets.

For Bitcoin, the key level to watch is the Short-Term Holder cost basis around $92.5k. This is a pivot point where a large proportion of recent buyers will see their holdings move into an unrealized loss. This could precipitate more downside as panic sets in. In either case, the current consolidation phase appears to be nearing its later stages, and the market looks ready to trend in one direction once again.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary:

Bitcoin investors have realized large losses during the downturn, with BTC prices falling as far as $93k.

When we normalize these losses into a BTC denomination however, the severity of the damage does appear to be in line with other local corrections.

The majority of the locked in losses originate from the Short-Term Holder cohort, as local top buyers experience a rapid decline in their profitability.

The Altcoin sector took the heaviest relative losses during the downturn, with the global altcoin market cap experiencing one of its biggest devaluations on record.

💡 View all charts in this edition in  The Week On-chain Dashboard. A Major Devaluation

Last week, Bitcoin investors experienced an intense whipsaw in price action. BTC prices initially fell to a low of $93k, followed by a brief recovery to $102k, and are now trading closer to $98k. The indecisive price action is largely in response to President Trump’s threat of tariffs applied to Canada, Mexico and China, providing an uncertain macro backdrop for investors. Alongside this, persistent strength in the US dollar has contributed to a marginally stressed liquidity environment.

Live Chart

Whilst the price of Bitcoin has fluctuated wildly over recent weeks, it has not moved very far from its starting position over this period, as the prevailing regime of choppy and generally sideways movement continues.

In the previous edition of The Week On-chain, we evaluated how the composition of Bitcoin investors has evolved this cycle. Bitcoin has seen a substantial uptick in liquidity entering the asset, and larger capital flows are balancing the inertia of an increasingly large asset. Additionally, the growing presence of a more resilient and patient holders has contributed to the stability of BTC prices, even amidst a relatively unstable macro backdrop.

On the other hand, the Altcoin sector has experienced significant sell-side pressure, with many assets struggling to achieve widespread adoption or product-market fit, making for a more challenged market environment. This has culminated in a wide-scale collapse of token prices, with all altcoin sub-sectors under-performing Bitcoin in recent weeks.

Live Dashboard

To explore the downside price action across the altcoin space, we can utilize Principal Component Analysis (PCA), which projects the correlation of token returns into a two-dimensional space. This visualization helps identify tokens that tend to behave similarly (clustered together) or differently (far apart) based on their return behaviors.

We can observe that the majority of ERC-20 tokens are densely clustered, highlighting that a wide swathe of altcoins experienced the same broad-based sell-off, with a distinct lack of idiosyncratic behavior between different sectors.

In other words, very few tokens managed to shrug off this weeks downside volatility, and they largely all moved lower together.

Live Dashboard

We can evaluate the magnitude of the drawdown by assessing the 14d change in the global altcoin market cap. Over the last fortnight, the altcoin market cap declined by $234B, with a small handful of events days recording a larger absolute drawdown.

The severity of this drawdown underscores the scale of the capitulation event, and can be reasonably considered to be an event within a bear market within the altcoin sector.

This is quite interesting as Bitcoin does not appear to display the same relative weakness, suggesting a divergence is opening up between BTC and the rest of the digital asset landscape.

Live Chart

If we look at this metric in percentage terms, the altcoin drawdown is still significant, with only 41 / 1662 trading days recording a larger drawdown. However, in this relative scale, it does remain more in line with previous drawdown events experienced throughout 2024.

The present drawdown is also substantially less aggressive when compared to the sell-off in May 2021 (the Great Miner Migration), and in late 2022 when LUNA/UST, and 3AC collapsed.

Live Chart Inspecting Bitcoin Losses

Despite Bitcoins price being relatively flat over the week, the realized losses locked in by Bitcoin investors during the choppy swings in price action was one of the largest of the current bull market cycle. Investors locked in around $520M in losses as the market sold off to $93k, being one of the largest local capitulation events so far.

Therefore, we can consider this as a meaningful capitulation event within the context of a macro scale bull market uptrend. Only the losses locked in on 5-August-2023, during the yen-carry trade unwind, stands out as a larger one day loss (seeing -$1.3B in realized loss).

Live Chart

As Bitcoin grows in size, we must also consider that absolute measures of realized loss may become misleading when we compare it to previous price ranges. When assessing these losses in a BTC denomination, which effectively normalizes for market size, the severity of the losses starts to look more ‘typical’.

This surge in losses is of a similar magnitude to previous local capitulation events throughout 2024, suggesting this may still be considered a normal event for a bull market correction / consolidation period.

Live Chart Profiling The Losses

During a bull market regime, long-term investors are generally highly profitable. Therefore, the dominant source of realized loss originates from the Short-Term Holder cohort, which accounts for the pool of recent investors who have the highest average cost basis.

Typically, Long-Term holder losses are absent during the bull market. Loss taking for the LTH cohort usually begins as the cycle transitions from a bull market into a bear market, and accelerates as the market drawdown intensifies. This ends with a final flush out, often peaking near the macro cycle low.

Alternatively, the comparatively price-sensitive Short-Term Holders tend to realize heavy losses during drawdowns within both bull and bear markets. Short-Term Holder realized losses totalled $520M this week, which is a similar magnitude to pullbacks throughout the 2024-25 cycle thus far.

Live Chart

If we increase the granularity of our profile for Short-Term Holder losses, we can see that the majority of losses were associated with investors who had only acquired their coins within the last 1-month. The age based breakdown is as follows:

24hr Realized Loss: $68.5M

1d-1w Realized Loss: $286.3M

1w-1m Realized Loss: $479.1M

1m-3m Realized Loss: $14.5M

3m-6m Realized Loss: $112.0

This reinforces the notion where the majority of onchain volume, and realized losses tend to be linked with investors who have most recently entered the market, and are thus the most sensitive to volatility and price fluctuations.

Live Chart Looking Forward

As prices whipsaw around, we can employ a suite of onchain derived pricing levels to explore some potential pathways and thresholds for price on the road ahead.

To assess areas of critical support, we can utilize the MVRV Z-Score on a 1yr rolling window. This specific transformation provides a clearer representation of near-term market dynamics, with the model capturing only recent market behaviour.

🔴 +1σ: $118.0k

🟡 Mean: $96.3k

🔵 -1σ: $80.1k

At the moment, price has found strong support near the Mean level. Should prices break lower, the -1σ may mark a key threshold for the bulls next major line of defensive support. Conversely, the +1σ level may act as resistance, as investors come into a meaningful amount of unrealized paper profit, and may seek to realize them into market strength.

Live Chart

Since we have identified that the majority of losses originate from the Short-Term Holder cohort, it becomes prudent to highlight their investment positioning as the market trades around this middle MVRV support range.

The average Short-Term Holder cost basis has also historically acted as a strong support level during a bull market uptrend. This pricing model currently trades at around $92.2k, and is a key region to hold for the market to avoid further downside.

We can similarly employ the ±1σ bands based on a 1yr Z-Score transformation, to assess the typical upper and lower bounds for price action.

Short-Term Holder Cost-Basis +1σ: $131k

Short-Term Holder Cost-Basis -1σ: $71k

Right now, the spot price is trading in between the upper and lower bands, and is hovering above the STH cost basis. This suggests that the bulls are still in control, but price is nearing their first lines of defence, and almost tested the STH cost basis during the recent sell-off event.

Live Chart

The importance of defending the STH cost basis and the MVRV 1Yr Z-Score pricing regions becomes increasingly apparent when overlaying the price traces onto the URPD volume profile. A significant volume air-pocket can be seen below these levels, where very few coins changed hands in that price range.

Additionally, the -1σ band for the STH cost basis resides at the upper bound of this volume gap, suggesting this may be a relatively sensitive area should prices fall that far.

Live Chart Summary and Conclusions

The Bitcoin price has been both wildly volatile, and ultimately flat over the last few weeks. It has traded up to a high of $105k, down to a low of $93k, and yet ended the week where it started around $98k.

This unstable price action resulted in a substantial loss event totalling $520M, one of the largest of the cycle when priced in USD. However, when assessing the severity of the drawdown through a normalized measure, the sell-off remains broadly inline with other local corrections.

In contrast, the Altcoin sector has undergone a broad sell-off, and failed to find firm footing. The majority of tokens have experienced a highly correlated downside sell-off, with few sectors spared from the damage.

This has led to one of the largest Altcoin devaluations on record, and highlights a notable dislocation between Bitcoin and the typical rotation of capital prior market cycles have seen towards the altcoin landscape.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary

Bitcoin has evolved into a global asset with extremely deep liquidity that is available at all hours of the day. This creates the conditions for investors to speculate, trade, and express their macro-economic views at times when traditional markets are closed.

Bitcoin continues to prove itself as an emerging store of value asset, accruing over $850B in net capital inflows. It also serves a role as a medium of exchange asset, processing nearly $9B in economic volume per day.

Multiple metrics for new demand remain elevated, however they are substantially lower than was experienced during the heights of previous cycles.

The composition of investors in digital assets is also changing, with a notable rise in more sophisticated institutional investors within the Bitcoin space. This has led to a general decline in the magnitude of drawdowns and a compression of volatility over time.

💡 View all charts in this edition in  The Week On-chain Dashboard. Proving Ground

Since Bitcoin’s inception in 2009, it has grown into a global asset with extremely deep liquidity, and remains actively traded at all hours of the day. Given global events often occur outside of traditional market trading hours, this makes Bitcoin of of the few assets where investors can express a view over weekends for example.

Over the weekend, Bitcoin experienced a sharp decline as market participants responded to the Trump administration's implementation of tariffs on Mexico, Canada, and China. Given other markets were closed, Bitcoin and other digital assets saw a sharp decline and then a recovery:

BTC traded from $104k down to $93k (-10.5%) before recovering to $102k.

ETH traded from $3.4k down to $2.5k (-26.5%) before recovering to $2.8k.

SOL traded from $236 down to $184 (-22.0%) before recovering to $217.

Live Chart

Bitcoin in particular now has increasingly role on the world stage, with nation-states such as the Kingdom of Bhutan running large-scale Mining operations, El Salvador promoting the currency to legal tender, and the United States Government considering the potential of Bitcoin as a strategic reserve asset.

Bitcoin has now traded above the psychologically important $100k level for several weeks now, a feat many critics deemed impossible. This was achieved 7 years on from its last logarithmic milestone of $10k, achieved during the 2017 bull run.

Live Chart

Whilst Bitcoin’s acceptance is growing amongst traditional investors, it still remains a contentious and polarising topic for many, often based on questionable claims regarding a lack of intrinsic value or utility.

Nevertheless, Bitcoin has cemented its position as one of the largest assets in the world, sporting a market capitalization of $2T, and ranking as the 7th largest asset worldwide. Notably, this positions Bitcoin above Silver ($1.8T), Saudi Aramco ($1.8T) and Meta ($1.7T), making it increasingly difficult to ignore.

Data Source

As the valuation and weight of an asset reaches these large scales, its inertia rises in tandem. The knock on effect is that Bitcoin now requires significantly larger inflows of fresh capital to achieve continued growth in its market cap. To explore this idea, we can utilize the Realized Cap metric which measures the cumulative netflow of capital into a digital asset.

If we benchmark from the cycle low set in Nov 2022, when the Realised Cap was $400B, Bitcoin has since absorbed an additional capital inflow of just approximately +$450B, more than doubling the Realized Cap.

This reflects the aggregate “value stored” in Bitcoin at around $850B, with each coin priced at the time it last transacted on-chain.

Live Chart

Whilst BTC is often viewed primarily as an emerging store of value asset, the Bitcoin network is also able to operate as decentralized rails for BTC as a medium of exchange. The combination of nodes and miners allow for any individual or entity to settle payments across borders, without the interaction of a third-party intermediary.

When utilizing Glassnode’s entity-adjustment heuristic to filter for only economical transactions, over the last 365 days, the Bitcoin network has processed an average of $8.7B per day, with total value transferred over the last year reaching $3.2T.

Both the Realized Cap, and the economic volumes settled by the Bitcoin network offer ewmpirical evidence that Bitcoin both has ‘value’ and ‘utility’, challenging the assumption by critics that it has neither.

Live Chart Relative Dominance

After establishing Bitcoin’s growing relevance as a macro asset, we can shift our focus internally, and analyze its dominance relative to the wider Digital Asset ecosystem.

Since the collapse of FTX in Nov 2022, Bitcoin Dominance has been in a persistent uptrend, rising from 38% to 59%. This suggests that there has been a net rotation and value accrual towards Bitcoin preferentially over others in the digital asset landscape.

This may be in part explained by the wider access that the US spot ETFs offer for institutional capital. Bitcoin also has a somewhat clearer core narrative as a scarce asset, held by many as a monetary hedge against the debasement of fiat currencies globally.

Live Chart

When we compare the Market Cap of Bitcoin and various altcoins (excluding Ethereum and Stablecoins), we can see a growing divergence in valuation is underway. Anchoring ourselves to the 2022 low once more, we can compare the growth in Market Caps.

Bitcoin Market Cap: $363B > $1.93T (5.3x)

Altcoin Market Cap: $190B > $892B (4.7x)

Live Chart

Whilst there is a divergence in size of Bitcoin and altcoin valuations, the correlation between the two remains robust. This suggests that the driver for this divergence is not the rate of growth between the two, but instead a substantial difference in capital entering Bitcoin relative to the Altcoin sector.

Whilst Bitcoin continues to garner the lions share of the capital from investors, it would be expected that Bitcoin dominance would continue to climb (with a reversal in that metric being a signal for capital rotation in the other direction).

Live Chart Where is New Demand?

With BTC prices breaking the $100k mark, one would expect the magnitude for Bitcoin exposure to be significantly heightened. We can evaluate this by assessing the percentage of network wealth which is held by coins acquired less than 3 months ago. The chart below plots how this metric has evolved over the 12 months after breaking to a new cyclical ATH.

Whilst new demand this cycle is meaningful, the wealth held in 3month old coins is much lower than it was compared to previous cycles. This suggests that there has not been the same magnitude of new demand inflows, seeming to occur in bursts and peaks, rather than on a sustained basis.

Interestingly, all previous cycles had concluded approximately one year after the first ATH break, which highlights the atypical nature of our current cycle, which first reached a new ATH in March 2024.

Live Chart

If we isolate the transfer volume from small wallets (with less than $10k), we can see a notable decline when compared to the 2021 ATH. This comes despite the significant increase in overall volume settled this cycle, and significantly higher Bitcoin prices.

This suggests that new demand for BTC has been dominated by larger sized entities, rather than small retail sized entities.

Live Chart

We can also utilize alternative datasets such as the Google Analytics search interest over time to support our thesis. Search intensity has not reached the previous euphoria levels witnessed during the 2021 bull run, despite a multitude of tailwinds for the asset.

Bitcoin Interest Over Time An Evolving Investor Base

Whilst the Bitcoin protocol is largely fixed in its structure and consensus code, the market response to it is an ever-evolving and dynamic process. The regulatory environment is in constant flux, and new financial instruments such as derivatives and the ETF products continue to develop around it. As the environment around Bitcoin evolves, so too does the composition of Bitcoin investors, which is most notable during this cycle.

When comparing the balance changes of smaller entities (Shrimp-Crab holding <10 BTC), we note a stark change in behavioral patterns in recent years.

During the 2013 and 2017 bull runs, we can identify periods of significant coin accumulation from these cohorts, often synonymous with ‘euphoric top buying’. This pattern appears to have broken down this cycle, with smaller entities engaging in more intense accumulation during corrections and pullbacks, and then transitioning into distribution as the market rallies to new ATHs.

This suggests the presence of a more sophisticated and educated investor base, even amongst those typically considered retail investors.

Live Chart

The introduction of the US Spot ETF Bitcoin instruments has also allowed new access for institutional investors, providing regulated exposure to Bitcoin. This has enabled the flow of latent institutional capital, with the ETFs taking in over $40B in net inflows, and breaching $120B in combined AUM in the 12-months since launch.

Live Chart

If we dive into the IBIT investor cap table (as noted by analyst TXMC), we can see clear signs of heightened demand from institutional investors. This provides further evidence that Bitcoin is attracting an increasingly sophisticated investor base.

Controlled Downside

One of the many advantages of onchain data is it helps us profile the behavior of investors during periods of stress, such as during pullbacks and drawdowns.

When we assess the magnitude of realized loss locked in during bull markets, our current cycle remains the most reserved. The only standout event where significant losses were taken by Bitcoin holders is the yen-carry unwind on 5-August. Outside of this, loss magnitudes have remained comparatively small, portraying a more patient, resilient, and price insensitive investor base.

This deviates meaningfully from previous cycle structures, where the 2015-2018 cycle was characterized by multiple periods of local capitulation. The 2019-2022 period was even more volatile, experiencing several deep and severe capitulation events, such as PlusToken unwind in mid-2019, The COVID-19 sell off in March 2020, and the great miner migration in mid 2021.

Live Chart

The volatility profile of Bitcoin is also in a state of change, with realized volatility trading at historically low levels for a bull market. Realized volatility on a 3-month rolling window is typically below 50% this cycle, whereas it regularly exceeded 80% to 100% in the prior two bull runs.

Live Chart

This reduced volatility profile, alongside the relatively level-headed investor base, has manifested as a much more stable price structure. The 2023-25 cycle thus far has been largely a sequence of stair-stepping price action (upwards rallies followed by periods of consolidation).

We have also seen a more controlled drawdown profile, with the current cycle experiencing the shallowest average drawdown from the local high of all cycles to date.

Live Chart Summary and Conclusions

Bitcoin continues to establish itself as a global macro asset. Its constant availability for trading allows investors to express their market opinions at any time of the day, whilst its deep liquidity enables investors to execute trades at significant sizes.

Addressing the criticisms regarding Bitcoin's role as a store of value and medium of exchange, the network has attracted over $850 billion in net capital inflows, whilst processing nearly $9 billion in economic volume daily. This data largely dispels challenges about these claims.

Recent regulatory changes in the digital asset ecosystem have spurred an evolution in the composition of investors, leading to a greater presence of sophisticated institutional investors in the Bitcoin market. This more patient, resilient, and less price-sensitive investor base has contributed to a reduction in the magnitude of drawdowns and a decrease in volatility over time.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

The current bull market shows several structural similarities to the 2015–2018 cycle. We explore this idea from the perspective of the drawdown profile, price performance, and changes in the Realized Cap. We also address misconceptions about exchange balances, helping to frame up how many coins are in the custody of these large entities.

Executive Summary

Cyclical Market Growth: The rate of Bitcoin price appreciation has declined cycle by cycle, reflecting a path into market maturity. The drawdown profile of this cycle thus far closely resembles that of the 2015–2017 cycle. Prior cycles also hint at a potential acceleration phase in the bull market, which tends to occur around this time (relative to the cycle low).

Realized Cap Expansion: The Realized Cap has grown by 2.1x in this cycle so far, below the 5.7x peak of the last cycle and aligns with the 2015–2018 cycle at this stage. The euphoria phase has yet to fully impact Realized Cap, indicating potential room for further market expansion.

Exchange Balances vs. ETF Wallets: We assess that the recent drop in exchange balances to 2.7M BTC is primarily due to supply migrating into ETF wallets, many of which are managed by custodians like Coinbase. Combined exchange and ETF balances have remained stable at around 3M BTC, reflecting a shift in market structure rather than a supply shock.

Capital Rotation Insights: Bull markets are characterized by long-term holders distributing coins to new investors. Recent capital rotation trends have seen the Bitcoin uptrend holding $100k, underscoring the key role that new buyers have in supporting price momentum.

💡 View all charts in this edition in  The Week On-chain Dashboard. Bitcoin's Cyclical Evolution

To begin our analysis, we set the stage by comparing the price performance and drawdown profile across Bitcoin’s last four market cycles. This helps to contextualize the prevailing bull run within historical trends.

The chart below showcases Bitcoin's price performance index relative to the cycle low, and the following chart looks at the drawdown profile during bull markets. Via an assessment of these two charts, a few key trends emerge:

Declining Cyclical Growth: The rate of price appreciation (gradients) has diminished with each cycle, reflecting the ongoing market maturity and the increasing capital required to grow a multi-billion to multi-trillion dollar asset valuation.

Drawdown Size: Drawdowns in the current cycle typically range between the 10.1% and 23.6% Fibonacci levels and closely resemble the 2015–2017 cycle.

Bull Market Phases: Bull runs typically feature an initial slow-growth phase (early bull), which is eventually followed by a period of rapid price expansion (the euphoric bull).

The current position of the 2023-25 cycle relative to the low set in late 2022 aligns with a possible transition into the second euphoric phase. Both prior cycles have seen a marked acceleration in price performance around this time, driven by an influx of new attention and demand for the asset.

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The current cycle mirrors trends seen in the 2015–2018 cycle, a primarily spot-driven market due to the lack of developed derivatives and stablecoin infrastructure. However, the overall performance of that cycle peaked at more than a 100x return from the low, which is arguably quite unlikely given the starting price of $15.6k this cycle.

Nevertheless, we can build on this analysis using the drawdown profile during uptrends. What stands out is how similar the pattern of pullbacks is since the low was set after FTX collapsed. Despite Bitcoin trading at a market cap which is orders of magnitude larger, the typical drawdown from the local high has rarely exceeded -25%.

This is a reflection of the impressive demand profile that has emerged for Bitcoin in recent years, in part due to the acceptance of it as a macro asset in finance and the role of spot ETFs as a source of new demand.

Live Chart Realized Cap Growth as a Bull Market Driver

To delve deeper into the phases and drivers of bull markets, we can examine how the Realized Cap has changed since each cycle low. This tool helps visualize the rate of net capital inflow deployed into the market, offering insight into the demand forces fuelling Bitcoin's cyclical rallies.

During the 2011–2015 cycle, the Realized Cap grew by an astounding ~122x, a product of Bitcoin’s early exponential adoption. However, as the market matured, growth ratios declined with each subsequent cycle, speaking to Bitcoin’s transition into a capital-intensive and structurally mature market.

In the current cycle, Realized Cap has grown 2.1x so far—well below the 5.7x peak of the previous cycle, but again showing similarities to the 2015–2018 cycle. We can also see the clear change in the gradient as each cycle enters the euphoria phase of the bull market, where the Realised Cap inflects sharply higher (in log space).

By this metric, the market has not yet fully entered this stage of exponential Realized Cap growth, which suggests there may be room for potential expansion should demand accelerate from here. This idea is likely balanced by the considerably larger size of Bitcoin today, requiring much more capital to follow a similar path.

Live Chart Rotation of Capital: Long-Term to Short-Term Holders

The underlying driver of the Realized Cap climbing higher is profit-taking by Long-Term investors. We introduce a framework to track the capital rotation from these long-term investors to new buyers, providing a clearer view of supply dynamics during bull markets.

In bull markets, long-term holders spend long-dormant coins to lock in profits while new buyers absorb that supply at higher prices. The sustainability of a bull market depends heavily on the aggressiveness of demand, which drives price appreciation and sustains momentum.

The chart below illustrates this capital rotation during prior market markets, with 1.2M coins changing hands since the LTH Supply ATH of 14.3M BTC in December 2023. During the recent rally above $100K, 1.1M BTC have transferred from long-term to short-term holders, representing an impressive inflow of demand to absorb this supply at prices above $90k.

Live Chart

The rate of supply distribution offers further insights into investor behaviour and can be thought of as the near-term sell-side pressure being exerted.

The chart shows the long-term to short-term holder supply ratio, revealing these distribution dynamics over time. A rising trend signals a dominance of accumulation and HODLing behaviour, as fewer old coins are spent and more migrate into Long-Term Holder status. Conversely, a decline in this metric indicates strong distribution by long-term holders at the present moment.

The monthly rate of change in this ratio highlights two primary waves of distribution that have occurred in the 2023-25 cycle, which are comparable in scale to those in early 2021 and late 2017.

In each case, the market rallied for over a month after the peak sell-side, suggesting a lessening sell-side allows breathing room for the demand to push prices higher. However, each eventually reached demand exhaustion, and the market started to transition back into a HODLing dominant phase during the subsequent bear market.

These metrics demonstrate the interplay between long-term holder activity and the role capital rotation has in sustaining bullish market momentum.

Live Chart Addressing a Misconception on Exchange Balances

There is a widely held misconception regarding the decline in exchange balances during this cycle and the potential implications for market structure.

Bitcoin balances on centralized exchanges have fallen to 2.7M BTC, down from 3.1M BTC in July 2024. While many interpret this as a form of supply shock caused by a mass of coins being withdrawn by individual investors—potentially creating upward price pressure—we believe the majority of this decline stems from coins reshuffling into ETF wallets managed by custodians like Coinbase.

Live Chart

After the SEC approved Bitcoin Spot ETFs in January 2024, eight of eleven spot ETFs selected Coinbase as their custodian. As demand for ETF products picked up, a significant migration of coins from exchange wallets into Coinbase’s institutional custodian wallets occurred.

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For clarity, the labels applied by Glassnode to exchange balances consider both the exchange wallets and those of Coinbase custody within the ‘Coinbase entity’.

In order to fully account for all ETFs, we can take the assets under management of the remaining ETFs that do not use Coinbase custody (FBTC and HODL) and add them to the total balance on exchanges.

Accounting for the net AUM growth of these ETFs since their inception, the combined balance of exchanges and ETF wallets has oscillated around 3M BTC, which is the same level as exchanges alone held in January 2024.

As a result, the apparent decline in exchange balances since November is more likely to represent a shift in market structure rather than an overall reduction in available supply due to individual withdrawals.

Live Chart Conclusion and Summary

Bitcoin’s rally reflects a maturing market with reduced overall cyclical growth, measured bull market drawdowns, and moderated Realized Cap expansion. Though lower than prior peaks, the current cycle's 2.1x Realized Cap growth aligns with the 2015–2018 cycle, leaving room for potential euphoria-driven expansion in the longer term.

We also clarified that the widely discussed drop in exchange balances does not signal a drastic depletion when accounting for the supply migration to ETF wallets. Therefore, the notion of an imminent supply shock due to declining exchange balances is inaccurate.

Instead, capital rotation from long-term holders to new investors remains the primary driver of market cycles. Following two distribution waves, the current cycle’s wealth rotation size and rate mirror the late 2017 and early 2021 bull markets. This suggests a demand exhaustion phase may follow in the short term, potentially leading to a predominant HODLing sentiment in the market.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary:

Capital flows into Bitcoin remain positive, although they have declined in magnitude since first reaching $100k. This highlights a period of declining sell-side pressure as the market approaches a near-term equilibrium.

Sell-side pressure from long-term investors has also declined, alongside volumes deposited to exchanges for sale.

Several measures of volatility are tightening up, with the market trading within a historically narrow 60-day price range, often a sign that the market is almost ready to move again.

💡 View all charts in this edition in  The Week On-chain Dashboard. Capital Flows Approaching Equilibrium

As the price hit the $100k level, net capital inflows into Bitcoin surged, signifying investors were locking in substantial profits. These capital inflows have since started to decline in magnitude as the market consolidates and acclimatises to the new price range.

This slowdown in profit-taking represents a net reduction in sell-side forces, thus requiring less fresh capital to maintain prices within the trading range.

The Realized Cap is currently trading at an ATH value of $832B, and is growing at a rate of $38.6B/month.

Live Chart

The Net Realized Profit/Loss metric is the first derivative of the Realized Cap, allowing us to discretely observe the magnitude of net capital flows occurring on-chain, denominated in USD.

As the market digests the profit-taking distribution pressure, the balance of realized profit and loss volumes gradually trends back towards the neutral position. This suggests that a reset of supply and demand forces is taking place, and that the majority of coins transacting at the moment are not locking in a large value delta relative to the price the coins were first acquired.

Profit taking volumes reached a peak of +$4.5B in December 2024, and have now declined to a value of +$316.7M (-93%).

Live Chart

The absolute magnitude of Realized Profit and Realized Loss (Entity-Adjusted) are another set of tools which helps us gauge the direction and sentiment of capital flowing in and out of Bitcoin.

When we sum realized profit and loss together, we can see this combined metric has experienced a sharp decline from its ATH of $4B, down to a value of $1.4B. Despite this -65% decline, the current value remains elevated from a historical standpoint, highlighting the scale of day-to-day demand absorbing this capital during bull market conditions.

Live Chart Supply Side Slows

We have established that there is a noteworthy decline in overall sell-side pressure. We can confirm this view using metrics like Coinday Destruction, and exchange inflow volumes to further investigate these dynamics.

The first tool we can employ to better profile investor distribution pressure is the Binary CDD metric. This metric tracks the expenditure of ‘holding time’ across the market, tracking when holders of old supply are transacting increasingly large volumes.

We saw a sustained period of heavy coinday destruction in late 2024, and early January. Over recent weeks, this metric has started cooling off, as relatively light coinday destruction took over.

This suggests that a significant number of investors who had planned to take profits have likely done so within the current price range. Generally speaking, this indicates that the market may need to go ‘somewhere else’ in order to entice and unlock the next wave of supply.

Live Chart

The Long-Term Holder (LTH) Binary Spending Indicator is another metric we can use to evaluate the duration of sustained sell-side pressure. This tool focuses specifically on long-term investors.

Aligned with the heavy profit-taking volumes from before, we can see a significant decline in the total LTH Supply as the market reached $100k in December. The rate of LTH Supply decline has since stalled out, suggesting a softening of this distribution pressure in recent weeks.

Currently, the total LTH supply is starting showing signs of growth back to the upside, suggesting that accumulation and HODLing behaviour is now larger than distribution pressure for this cohort.

Live Chart

Centralized exchanges remain the primary venue for speculation and trade, and process billions of dollars in flows on any given day. Exchange inflows have markedly declined from a peak of $6.1B to $2.8B (-54%), which underscores a considerable reduction in recent speculative activity.

Notably, LTH inflow volumes to exchanges have declined from $526.9M in December, to a current value of just $92.3M, a -83% decline in deposit volumes.

This further supports the thesis that long-term investors may have completed a large tranche of their profit-taking within this price range.

Live Chart

In order to further profile the supply and demand balance, we can compare the rate of various cohorts balance change, normalized by to the volume of BTC mined. This provides a relative measure compared to new issuance which was theoretically absorbed by each cohort.

Focusing on the Shrimp-Crab cohort (holding <10 BTC) as a proxy for retail and individual investors, we note that this cohort has absorbed around +25.6k BTC over the last month. This compares to monthly issuance of around +13.6k BTC minted by miners.

As a result, these retail and individual holders have effectively absorbed 1.9x the volume of new supply coming to market via primary production.

Live Chart Coiling Volatility

A strong degree of confluence can be noted between both on-chain models, and the historically narrow 60-day price range, allowing investors to preempt regimes of heightened volatility.

By measuring the percent range between the highest and lowest price ticks over the last 60 days, we can see the compression or market volatility over time. The chart below highlights periods which have a tighter 60 day price ranges than the current trading range. All of these instances have occurred prior to a significant burst of volatility, with the majority being in early bull markets, or prior to late stage capitulations in bear cycles.

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Sustained sideways price action within a narrow range allows for a large proportion of the circulating supply to redistribute and concentrate at a relatively higher cost basis.

The Realized Supply Density metric quantifies the supply concentration around the current spot price within a ±15% price move. When supply is highly concentrated around the spot price, small movements in price can significantly affect investor profitability, which in turn can amplify market volatility.

After the Bitcoin price peaked in December, it started to consolidate, creating a dense concentration of supply with a cost basis close to the spot price. Currently, 20% of the supply resides within a ±15% of the spot price.

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The Sell-Side Risk Ratio describes this phenomenon from a different perspective. This metric assesses the total volume of both realized profit and loss locked in by investors relative to the asset size (measured via the Realized Cap). We can consider this metric under the following framework:

High values indicate that investors spend coins at a significant profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium and usually follows a high volatility price move.

Low values indicate that most coins are being spent relatively close to their break-even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range and usually describes a low volatility environment.

There has been a significant contraction in Short-Term Holder spending activity in recent weeks, leading the Sell-side risk to decline very sharply. This often signals that all of the profit and loss taking events which investors planned for, have now been executed. It tends to signal that the market is near a local equilibrium, and is a precursor to the next wave of volatility.

Live Chart Summary and Conclusion

Bitcoin has experienced intense intraday whipsaws in price, surging to a new ATH of $109k before crashing and subsequently stabilizing above $100k. This heightened degree of market indecision is compounded by the challenging and uncertain macro backdrop heading into, and across the US Presidential inauguration.

In this article, we evaluated and analyzed the conditions preceding the explosive yet wavering price action. We present a framework to identify signposts for impending volatility by utilizing the confluence of diminishing on-chain volume and capital flows, alongside a tightening price range.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

Executive Summary

Bitcoin has entered a correction phase, trading -11% below its ATH of $108k but remaining above key support levels, retaining a constructive market structure.

Z-Score analysis suggests cyclical highs typically align with various metrics trading 1.5 to 2.0σ above the mean, offering a framework to help navigate bullish market phases.

Bitcoin's current price is around 10% above the Short-Term Holders' cost basis of $88.4k, underscoring a potential risk of downside if momentum stalls and price trades below this level.

Unrealized losses are concentrated among short-term holders, with 2.0–3.5M BTC held underwater, reflecting moderate stress in the market.

Relative Unrealized Losses peaked at 4.3% during Q3 2024, significantly lower than prior cycles driven by external shocks, highlighting a more spot-driven and patient market.

💡 View all charts in this edition in  The Week On-chain Dashboard. Evolving Peaks

The Realized Price reflects the average price at which all Bitcoins last moved on-chain, thus representing the market's aggregate cost basis. The MVRV Ratio is the ratio between the spot price, and the realized price, and it gauges the magnitude of unrealized profit held on average. Values above 1 signal an average unrealized profit, and trading below 1 indicate an unrealized loss.

The MVRV ratio is currently trading at 1.32, indicating the average unit of BTC is holding an unrealized profit of 32%. This structure is similar to post-ATH in mid-April 2024, suggesting an overall undertone of positive sentiment despite the market correction.

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Over the years, Bitcoin's market has matured, which is accompanied by a cyclical decay in the peak values of MVRV near cyclical tops. This reflects an overall dampening of speculative extremes as the asset grows in size.

Each market cycle has seen progressively lower MVRV highs, signalling lower average unrealized profit multiples being reached:

2011: 8.07x

2014: 6.00x

2018: 4.81x

2021: 3.98x

2024: 2.78x (to date)

This decline describes a gradual reduction in volatility and speculative intensity as the market grows in scale and liquidity. It also suggests that, whilst Bitcoin remains cyclical, each peak becomes relatively less exaggerated, aligning with a more mature and efficient market structure.

Live Chart

To account for the diminishing peaks in MVRV over successive cycles, we can employ statistical methods to normalize its oscillating range. One such widely accepted approach in financial time series analysis is the Z-Score, calculated using the formula:

Z-Score = (X - μ) / σ

Where:

X is the observed value,

μ is the mean,

σ is the standard deviation.

In calculating the Z-Score, we can either use the entire historical dataset for a cumulative view or adopt a shorter rolling window to better capture the dynamic nature of financial cycles and diminishing peaks in MVRV.

Using the entire historical data for the MVRV Z-Score transformation can lead to some distorted results, as earlier cycles with much higher peaks skew the mean and standard deviation, making them less reflective of current market conditions.

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Therefore, in an attempt to account for these effects, we have optimized the rolling window by reducing its length and thus using more recent market history as our benchmark.

The chart below compares the cumulative Z-Score with a version calculated using a 4-year rolling window. Despite this attempt to adapt to the dynamic nature of market cycles, the results remain nearly identical, and the issue of decaying peaks in MVRV persists unresolved.

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Moving to a 2-year rolling window for the Z-Score calculation (blue), the peak observed in the most recent cycle ATH in March 2024 aligns closely with the peak ranges of the previous two cycles.

In this instance, we have now adjusted for the diminishing MVRV peaks. However, significant market highs in Q4 2015, Q3 2019, and Q2 2023 are not flagged by the 2-year rolling window Z-Score, suggesting there may be further optimization potential.

Live Chart

Finally, we have applied a 1-year rolling window to the Z-Score calculation, resulting in a more refined and promising transformation. This approach works to identify both the mid-cycle and late-cycle peaks on a similar scale, offering a clearer representation of near-term market dynamics.

This 1yr MVRV Z-score reveals that cyclical bulls consistently reach local and global peaks 2σ range, where investor profitability has increased significantly over a relatively short period of time. During bear market phases, local and global lows are captured when MVRV trades -1.5σ from the mean.

This improved MVRV Z-Score may provide a more responsive framework for identifying key market turning points throughout the cycle and helps adjust for the overall diminishing peaks near the extremes.

Live Chart

Now that we have optimized the rolling window to 1yr, we can extend this framework to back-calculate the threshold price levels which would define these near-term peaks and troughs.

Bull markets are characterized by prices trading between the 1-year mean, and peaking around 2σ above it. Conversely, bear markets see prices remain below the mean, with significant lows occurring near -1.5σ. This structured approach allows for a clearer delineation of market phases.

Currently, Bitcoin is trading at $94,398, positioned above the 1-year mean of $90.9k but below the +2σ threshold at $112.6k. This suggests the market remains in a bullish phase, though it has retreated slightly from recent euphoric levels, which were above the upper band at the time.

Live Chart Assessing The Correction

With the 1-year MVRV Z-Score model showing the market cooling off from a powerful rally, we can now assess the state of investor profitability by measuring the unrealized losses held. This helps to gauge market participant incentives and identify key areas of risk to keep an eye on.

First, by analyzing the Entity-Adjusted Cost Basis Distribution of the circulating supply, it becomes clear that all unrealized losses are concentrated among short-term holders—investors who acquired their coins in the last 155-days, near the market peak.

Live Dashboard

Focusing on short-term holders as potential sellers under pressure, if the current market drawdown deepens, we can look for areas where unrealized losses may become severe.

The average Short-Term Holder cost basis is currently trading at $88.4k. Based on a similar statistical approach covered above, we have also displayed a high ($125.5k) and low ($68.5k) band, representing typical limits of price action during bull and bear markets.

The spot price is currently trading 9.2% above the Short-Term Holder cost basis, indicating that the market is still within the norms of a typical bull market. However, if the market fails to regain upward momentum, there is a heightened chance that falling below the STH cost basis could precipitate near-term stress, and potentially additional sell-side out should investors start to panic.

Live Chart

In order to better gauge the degree of stress experienced, we can assess the BTC supply, which is currently in a state of unrealized loss. From a historical perspective, over the last 10 years, we can observe that:

During bull markets, the number of coins underwater has typically remained below 4 million.

Early bear market stages have been marked by 4–8 million coins held in loss.

This week, the volatility in the market pushed between 2.0 and 3.5 million coins into loss. While significant, this range is still lower than the 4 million coins in loss during the local market low set between July and September 2024. This suggests that the current market is likely in a less distressed state than it was during the previous corrective phase.

Live Chart

Another dimension for measuring pain in the market is the Relative Unrealized Loss metric, which measures the ratio of unrealized losses (in USD) relative to the market capitalization. Reviewing recent cycles highlights parallels between the current market and the 2016–17 bull market.

Unlike the 2019–22 cycle, where external shocks like the COVID-19 pandemic and the China mining ban pushed the Relative Unrealized Loss to levels exceeding 10%, the Q3 2024 consolidation phase only pushed this metric to ~4.3%.

It could be argued that the current market cycle has experienced less acute stress, likely due to shallower drawdowns, reduced volatility, and the new spot demand brought in via the ETFs, as well as institutional investors.

Live Chart Conclusion

Bitcoin has entered a correction phase and is trading 11.1% below its ATH of $108k. However, the spot price is still trading above several key support levels, suggesting the bullish market structure remains intact for now. This is compounded by the relatively light levels of distress in the market, as measured by historically small unrealized losses held by market participants.

We also showed how an optimized MVRV z-score using a 1-year rolling window provides a framework to navigate near-term bullish and bearish market phases. According to this model, we are also still within bullish territory, although the Short-Term Holder cost basis remains $88.4k is a key level to watch for maintaining constructive sentiment.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

Join our Telegram channel.

For on-chain metrics, dashboards, and alerts, visit Glassnode Studio.

💡 New SPL (Solana Programmable Language) Insights: 61 Solana Tokens, Including 52 Memecoins, Now Supported We’re excited to roll out fundamental metrics for 61 Solana-based tokens, including 52 memecoins. These assets now have address activity, transfer activity, and volume metrics. For those with a perpetual futures market, these new metrics complement the existing futures metrics. You can explore these new insights in the SPL Assets category on the charts page. More assets and expanded metrics are coming soon. Executive Summary:

Since the cycle low in Nov 2022, Solana has outperformed Bitcoin and Ethereum when measured from the lens of price appreciation and relative capital inflows.

A sustained regime of positive capital inflows has resulted in a net liquidity increase of +$55B, providing significant tailwinds for price appreciation.

Despite substantial profit taking and distribution, investors in Solana have not reached the degree of unrealized profitability (paper gains) which have historically aligned with longer-term macro topping formations, suggesting further room for growth across the cycle.

A Comparison of the Majors

Over the past 4 years, Solana has attracted both considerable interest and concern from investors and market speculators alike. Initially, the asset saw tremendous growth during the 2021 bull market but then faced significant challenges following the collapse of FTX, resulting in a severe overhang in supply.

After plummeting to a shocking low of just $9.64, Solana has made a remarkable recovery, recording an astonishing increase of +2,143% over the last 2 years. This impressive price performance has allowed Solana to outperform both Bitcoin and Ethereum on 344 out of 727 trading days since the FTX event, showcasing the substantial growth and demand for the asset.

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The surge in price action has also attracted and enticed a substantial degree of fresh capital to the asset. We can utilize the relative Realized Cap change across Solana, Bitcoin and Ethereum as a measure to assess and compare the flow of capital into each network.

Since the Dec 2022 low, Solana has accrued a considerably larger percentage increase in capital than both Bitcoin and Ethereum across 389 / 727 trading days, underscoring its noteworthy growth in liquidity.

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To assess momentum on the demand-side, we can track the capital inflow of new investors, which is referred to as the Hot Realized Cap. This metric measures the capital held by accounts that have been active in the last seven days.

When comparing the magnitude of new capital entering the asset between Solana and Ethereum, we can observe that new investor demand for Solana, for the first time in history, has overtaken Ethereum, highlighting its robust demand profile.

Notably, the stark uptick in Hot Realized Cap for Solana before the start of 2024 marked the upward inflexion point in the SOL / ETH ratio, with the influx of new capital driving growth.

Live Chart Investigating SOLs Capital Flows

After establishing Solana's outperformance relative to the other major assets, we shall now examine the magnitude and composition of Solana’s capital flows.

By assessing the Net Realized Profit / Loss metric, we can visualize the Realised Cap's first derivative, the daily change in on-chain capital flows for Solana. When this metric is positive, it represents net capital creation (coins transacting in profit) or destruction when the metric is negative (coins moving at a loss).

We observe that Solana has consistently maintained a positive net capital inflow since early September 2023, with only minor outflows during this period. This sustained influx of liquidity has assisted in stimulating growth and price appreciation, achieving a remarkable peak inflow of $776M of new capital per day.

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Increasing granularity, we can utilize our age breakdowns of the realized profit metric to evaluate which sub-cohorts are contributing the most to sell-side pressure. Here, we calculate the cumulative profit-taking volume by age since the start of the Jan-2023.

24hr: $3.1B

1d-1w: $13.7B

1w-1m: $14.0B

1m-3m: $8.5B

6m-12m: $15.7B

1y-2y: $8.2B

2y-3y: $8.2B

3y-5y: $3.5B

Notably, coins aged 1d-1w, 1w-1m, and 6m-12m are the significant contributors to sell-side pressure, each recording a comparable magnitude of profit. Together, they account for a substantial 51.6% of all profit realized, demonstrating a balanced distribution of market influence. This underscores the notion that Solana as an asset is seen as an investment opportunity for all denominations of investor profile.

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During the same time period, the significant inflow of capital has allowed Solana to accrue over +$55B in USD liquidity, increasing the Realized Cap from $22B to an astonishing $77B.

Live Chart Overheated?

In the previous section, we we assessed and evaluated the significant amount of profit taking and supply distribution occurring, thus, it becomes to prudent to assess how overheated the market has become.

For this, we can utilize the MVRV Ratio to define pricing bands which assess points of extreme deviations in investor profitability relative to the long-term mean. Historically, breakouts above 1 standard deviation have aligned with longer-term macro topping formations.

Presently, the SOL price is consolidating between the mean and +0.5 standard deviation range. This suggests the market is relatively heated, but suggests the potential for further room to run before the profit held by the average investor reaches its extreme band of +1σ, enticing a flurry of profit taking and distribution.

Live Chart Summary and Conclusions

With the release of the new Breakdown metrics, we are able to analyze for the first time the behavior of investors during dynamic market periods for the Solana asset, providing significant colour into the mechanics of capital creation and destruction.

Solana’s meteoric recovery and subsequent price appreciation has been nothing short of remarkable, and has successfully accrued significant capital from a wide distribution of investors, ranging from Institutional to Retail oriented.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

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