Bitcoin may still need another leg lower before it forms a durable market bottom, according to fresh on-chain analysis that suggests the network has not yet reached the capitulation levels seen near the end of previous Bitcoin bear phases.
The key signal is the net unrealized profit/loss ratio, known as NUPL, a long-term profitability gauge that tracks whether Bitcoin holders are sitting on paper gains or paper losses. Research from CryptoQuant shows that the metric’s 100-day exponential moving average has fallen to its weakest level since early 2023, but remains above the zone that has historically coincided with major cycle bottoms.
That leaves the market in an uneasy position. Bitcoin is trading just above $60,000, yet on-chain data suggests the broader holder base has not experienced the kind of widespread unrealized losses that previously marked durable lows. In past cycles, the 100-day EMA of the NUPL ratio fell below zero before Bitcoin established major bottoms. Those moments aligned with lows near $2 in 2011, $182 in 2015, $3,206 in 2018, and $15,792 in 2022.
CryptoQuant’s latest reading places the smoothed NUPL measure near 0.158, its lowest level in more than a year but still positive. A related current reading cited alongside Bitcoin’s price sits closer to 0.215, also above the historical capitulation threshold. In either case, the conclusion is similar: the market has cooled sharply, but the classic on-chain signature of a final bottom has not clearly appeared.
The analysis does not guarantee another sell-off. It does, however, indicate that Bitcoin has not yet repeated the full bottoming structure that has appeared in every completed cycle so far.
Why the NUPL signal matters
NUPL is widely followed because it measures the unrealized profit or loss across the Bitcoin network. Put simply, it compares the price at which coins last moved with the current market price. When the reading is positive, the market as a whole is still holding unrealized profit. When it turns negative, unrealized losses dominate.
That shift matters because major Bitcoin bottoms have often occurred when a large share of holders is underwater. These periods tend to reflect capitulation, when weaker hands have already sold, forced sellers have been flushed out, and the remaining supply is held by participants with higher conviction.
The 100-day exponential moving average adds another layer by smoothing the daily noise in the data. Rather than reacting to short-term price swings, it helps identify broader cycle conditions. CryptoQuant’s contributor, operating under the pseudonym TheChessOnChain, described the measure as a consistent indicator of market-cycle turning points.
The historical record is notable. Each time the smoothed NUPL ratio fell below zero, Bitcoin went on to form a major market floor. That pattern helped identify deep-cycle lows across several very different market environments, including early Bitcoin’s low-liquidity years, the post-2017 bear market, and the 2022 downturn following a string of industry failures and forced deleveraging.
The problem for traders today is that the metric has not yet reached that same extreme. It has weakened, but not collapsed into the loss-dominant zone that has previously indicated seller exhaustion.
Two possible paths for Bitcoin
CryptoQuant’s research points to two broad outcomes.
The first is a repeat of history. In this scenario, the NUPL ratio continues to fall, eventually crosses below the zero line, and confirms that the market has entered a deeper capitulation phase. If that happens, Bitcoin could face further downside pressure before a lasting bottom forms.
The second outcome is a break from the historical pattern. The NUPL ratio has shown a tendency toward higher lows over time, meaning each cycle has become somewhat less extreme than earlier ones. If that structural trend continues, Bitcoin could establish a bottom without the metric falling below zero.
That possibility is important because Bitcoin’s market structure has changed significantly. Spot Bitcoin ETFs, deeper derivatives markets, wider institutional participation, and broader macro sensitivity have altered how capital moves in and out of the asset. A maturing market may not always reproduce the exact signals that governed earlier cycles.
Still, the zero line remains the level to watch. CryptoQuant said that area is the primary threshold for assessing whether the current downturn is merely a sharp correction or part of a deeper cycle reset.
For now, the data sits between those two interpretations. The market is not overheated, but it is not fully washed out either.
Capitulation has not fully arrived
The current state of unrealized profit across the Bitcoin network suggests that widespread capitulation has not yet taken place. Historically, capitulation has been a key feature of major lows because it shows that many holders have been pushed into losses and that selling pressure may be nearing exhaustion.
At present, enough of the market remains in unrealized profit to keep that signal from triggering. This does not mean Bitcoin must collapse, but it does mean that one of the more reliable historical bottom indicators has not yet confirmed a final low.
For traders, this creates a difficult setup. Buying too early risks exposure to another downside move if the market continues to follow its historical cycle pattern. Waiting for a deeper NUPL reading, however, risks missing a recovery if Bitcoin bottoms at a higher profitability level than in past cycles.
That tension is visible across the market. Short-term sentiment remains fragile, while long-term conviction has not disappeared. Some holders appear willing to accumulate into weakness, but broader flows from regulated products have recently been much less supportive.
ETF flows have become a key pressure point
One of the most important differences between the current cycle and earlier Bitcoin downturns is the role of spot Bitcoin ETFs. These products have become a major channel for institutional demand, and their flows can now influence short-term price direction in a way that was not present in prior cycles.
Recent ETF activity has been mixed but, until the latest rebound, heavily negative. June recorded the worst month for spot Bitcoin ETF outflows since the products began trading, with roughly $4.5 billion withdrawn. That wave of redemptions added selling pressure at a time when Bitcoin was already struggling to maintain momentum.
The outflows were especially important because they countered accumulation from other parts of the market. Long-term holders have reportedly started adding exposure again during the decline, suggesting that some experienced market participants view the weakness as an opportunity. But ETF redemptions can produce steady supply pressure, particularly when large withdrawals force underlying Bitcoin sales or reduce demand from authorized market participants.
More recent data offered a tentative shift. Spot Bitcoin ETFs recorded their largest single-day net inflow since May, taking in more than $265 million in one session. That was a meaningful reversal after a difficult stretch for the products.
The market now needs confirmation. A single strong inflow day can reflect tactical positioning, short covering, or temporary rebalancing. A sustained streak would carry more weight and could suggest that ETF demand is stabilizing after a period of heavy withdrawals.
Until that happens, ETF flows remain a source of uncertainty rather than a clear bullish signal.
Exchange deposits raise volatility risk
Another factor clouding the near-term outlook is a sharp rise in Bitcoin moving to exchanges. On June 30, nearly 49,000 BTC were deposited onto trading venues, a volume seen only four other times this year.
Large exchange inflows are watched closely because they can signal potential selling. Coins moved from cold storage or private wallets to exchanges are more readily available for trading, hedging, or liquidation. Not every deposit results in immediate selling, but the increase in available exchange supply can raise the risk of volatility.
Analysis indicates that the latest transfer wave was driven by large-scale market participants. That makes the signal harder to ignore. When large holders move coins to trading venues during a fragile market phase, traders often interpret it as a sign that major accounts are preparing for possible action.
The timing is also important. Bitcoin is hovering above psychologically important price levels while on-chain profitability measures remain short of full capitulation. In that environment, a large increase in exchange supply could intensify downside pressure if support levels fail.
At the same time, exchange deposits can also reflect non-directional activity. Large holders may move coins for collateral management, over-the-counter settlement, custody restructuring, or derivatives positioning. The signal is cautionary, not conclusive.
Still, combined with weak NUPL readings and recent ETF outflows, the increase in exchange deposits adds another reason for traders to avoid assuming that the correction is already finished.
Short- and mid-term signals remain mixed
Other on-chain metrics are also sending a cautious message. Analyst Axel Adler Jr. has reported that the share of Bitcoin supply held at a loss may need another two months to reach levels normally associated with the end of prolonged downturns.
That view reinforces the idea that the current adjustment is still developing. If the supply-in-loss metric continues to rise, it would suggest that more holders are being pushed underwater, potentially moving the market closer to a historical bottoming zone. But if price stabilizes before that point, the market could avoid a deeper capitulation event.
Adler described the current market phase as an ongoing adjustment rather than a completed reset. No specific timetable was given for a rebound, and the available data does not yet provide a clean turning signal.
This is why the current environment is difficult to interpret. Some ingredients of a bottom are present: sentiment has weakened, profitability has compressed, and long-term holders appear more active on the buy side. But other signals are missing or incomplete. NUPL has not crossed below zero, supply in loss may not yet be high enough, and ETF flows have only just begun to recover after a severe monthly outflow.
The market is waiting for confirmation
Bitcoin’s broader trend now depends on whether selling pressure fades before historical capitulation signals are reached. If ETF inflows continue, exchange deposits slow, and long-term holders absorb supply, Bitcoin could form a higher-cycle bottom without NUPL falling below zero. That would mark a notable departure from previous cycles but would fit the idea of a maturing market with less severe drawdowns over time.
If those supports fail, the historical template points to a deeper correction. A move in the 100-day EMA of NUPL toward or below zero would strengthen the case that Bitcoin is entering the final stage of a broader reset. That could be painful in the short run, but it would also bring the market closer to the kind of conditions that have previously preceded major recoveries.
For now, the message from the data is not one of panic, but of caution. Bitcoin has already corrected enough to weaken several profitability measures, yet not enough to confirm the kind of capitulation that has marked past cycle lows.
The next several weeks may be decisive. Traders will be watching the NUPL zero line, the share of supply held at a loss, ETF flow trends, and large exchange deposits for evidence that the market is either stabilizing or preparing for another move lower.
Until those signals align, the most balanced reading is that Bitcoin remains in a bottoming process, not necessarily at the bottom itself.
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