Bitcoin stays in longest capitulation phase since 2022

Bitcoin’s current downturn has produced its longest capitulation reading since the 2022 bear market, with 45 market indicators tracked by onchain analytics firm Glassnode remaining in stress territory for much of 2026. The firm’s composite Bitcoin Cycle Position Heatmap has stayed predominantly blue—the color it uses for capitulation—though it has not yet reached the deepest readings associated with prior market bottoms.

The assessment places the market in an extended period of weak sentiment and compressed profitability rather than a confirmed cycle floor. Rafael Schultze-Kraft, Glassnode’s co-founder and the creator of the heatmap, said the model is in its coldest stretch since the period around FTX’s collapse in November 2022.

Bitcoin’s previous bear-market low arrived near $15,600 during that FTX-led market shock. Glassnode’s current reading suggests that the market has revisited comparable stress conditions, but without fully matching the deepest capitulation signals observed at the end of 2022.

Heatmap combines 45 Bitcoin market indicators

Glassnode’s Bitcoin Cycle Position Heatmap is designed to combine 45 indicators into one view of where Bitcoin may sit in a broader market cycle. Its color scale moves from blue during capitulation phases to red during periods of euphoria, which have historically appeared closer to major market peaks.

The heatmap shifted from euphoric readings in November 2021 to mostly blue conditions throughout 2022, a period that included the collapse of several large crypto businesses and a sustained decline in Bitcoin’s price. Its return to a persistent blue range in 2026 indicates that a large share of the underlying indicators are again signaling pressure across the network and among market participants.

The model incorporates price, market capitalization and profitability measures, including data split between short-term and long-term Bitcoin holders. That distinction matters because holders who acquired coins recently generally face more immediate pressure to sell when prices fall, while long-term holders can offer a clearer view of whether older supply is beginning to move.

Schultze-Kraft cautioned that individual measures can change their behavior as Bitcoin’s market structure evolves. He pointed to dormancy, an onchain metric that tracks how long BTC remained unmoved before being transferred. A rise in dormancy can indicate that older coins are changing hands, though the interpretation depends on the surrounding market conditions.

That limitation is central to reading composite cycle tools. The heatmap can identify whether many indicators are converging toward stress or exuberance, but it cannot establish an exact price bottom on its own. Glassnode’s own framing leaves room for further weakness before the market resembles the most severe conditions of past bear-market lows.

Network activity has picked up despite weak cycle readings

Glassnode’s Monday Market Pulse report described stronger onchain activity even as the cycle heatmap remained in capitulation territory. Daily active addresses and entity-adjusted transfer volumes moved above their upper statistical bands, according to the firm.

Entity-adjusted volume attempts to reduce distortions created when one user or business controls multiple addresses. Higher readings can reflect increased economic activity on Bitcoin’s base layer, although they do not reveal whether that activity comes from accumulation, selling, custody movements or transaction batching.

Glassnode attributed the rise to higher network engagement and greater economic throughput. The combination of higher onchain activity and subdued cycle readings gives the market a more mixed profile than a simple price chart would suggest: Bitcoin’s network is seeing more transfers while the broader set of profitability and valuation indicators remains under pressure.

The firm also reported stabilization in capital outflows following a market reaction linked to a low-entropy bug exploit affecting Coldcard hardware wallets. The episode added a practical security concern to an already fragile market backdrop, particularly for users focused on self-custody.

Small Bitcoin transfers resemble late-2022 activity

Separate figures from CryptoQuant showed a rise in transactions involving 1 BTC or less, a category often associated with smaller wallet activity. On July 31, transfers of 1 BTC or less reached 39,600 BTC, according to CryptoQuant. That was close to the 39,900 BTC recorded on November 16, 2022, shortly after FTX’s collapse.

The comparison does not establish that smaller holders are buying rather than selling, since transaction-size data does not identify the purpose behind each transfer. It does show that activity in smaller denominations has returned to levels last seen during one of Bitcoin’s most severe recent market dislocations.

Such data can be useful alongside holder-profitability measures. If smaller transfers rise while profitability remains depressed, the market may be seeing coins redistributed between participants rather than a broad return of speculative demand. That would fit Glassnode’s picture of a market still working through a prolonged capitulation phase.

Glassnode’s Adaptive Sell-side Risk Ratio, another measure used to assess whether coins are being moved at unusually large realized profits or losses, fell to 0.031 in early August, according to the firm. The reading placed the metric in the lowest 3% of observations during the current market cycle.

Low sell-side risk readings generally indicate that onchain participants are realizing relatively limited profits or losses compared with the network’s overall value. In a declining market, that can point to reduced speculative activity and a period in which holders are becoming less willing—or less able—to transact at large gains.

Bitcoin’s current onchain picture therefore remains unsettled. The network is recording higher activity, small transfers have approached late-2022 levels, and selling pressure appears to be stabilizing in some measures. Yet Glassnode’s composite heatmap remains short of the deepest capitulation conditions that marked the FTX-era bottom, leaving the market without a clear onchain confirmation that the correction has fully run its course.