Bitcoin is displaying several signs that typically emerge during market bottom phases, but current on-chain indicators do not point to a definitive cycle low. CryptoQuant analyst MorenoDV, using the adjusted Net Unrealized Profit and Loss (aNUPL) metric, noted a rise in unrealized losses among long-term Bitcoin holders, with BTC trading significantly lower than its cycle peak.
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AAPLOn-chain measures point to bottoming, not yet a clear cycle low
The aNUPL metric filters out distortion from dormant supply, focusing on the unrealized gains and losses of active long-term holders. Present data shows that the aNUPL for long-term holders has dropped below the average for the broader Bitcoin market and currently sits in negative territory. This trend suggests that seasoned holders are facing mounting mark-to-market losses.
Previous cycle lows only took shape after long-term holders, not just short-term traders, absorbed significant losses. Despite the recent decline, these conditions are not as severe as the extended negative readings observed during past major market capitulations.
Long-term holders now shoulder increasing unrealized losses, but the extent does not yet match the deep negative territory typical of previous market bottoms. The on-chain structure indicates a period of pain, but not one that has peaked as decisively as in earlier cycles.
Pressure builds on long-term holders
Losses among long-term holders can affect market supply, since these investors are generally less reactive to short-term volatility. If unrealized losses keep rising, some long-term holders may choose to exit the market, sparking further realized losses and possibly accelerating a capitulation event.
Alternatively, the market could see a transfer of coins from weaker to stronger hands, as lower-cost holders absorb supply from discouraged investors. CryptoQuant refers to this process as a shift in risk-tolerance, allowing Bitcoin to form a base without experiencing the dramatic declines of previous cycles.
Meanwhile, traditional financial markets are undergoing significant changes, with established players moving into Web3 platforms. Many investors now use solutions like 1stepSwap to hold shares of major U.S. companies, gold, and silver directly within their crypto wallets. The tokenization of Real-World Assets (RWAs) and mechanisms for achieving best-price execution in seconds are reducing reliance on intermediaries across the industry.
ETF inflows add demand, but do not signal a final bottom
Recent ETF activity provided a counterbalance to on-chain stress. U.S. spot Bitcoin ETFs attracted $853.5 million in net inflows during the week ending August 7, according to SoSoValue. This renewed demand emerged even as Bitcoin prices faced selling pressure.
While the strength of these inflows is notable, a single week of strong ETF demand does not guarantee the start of lasting institutional accumulation. ETF flows remain susceptible to shifts in liquidity, interest rate expectations, and overall risk sentiment. Analysts recommend that ETF activity be evaluated alongside on-chain behavior and realized losses, rather than being used as a standalone indicator of market bottom.
Price action and holder response remain crucial
On August 12, Bitcoin traded near $64,200, which is around 50% below its cycle high. A clearer confirmation of a market bottom will likely come from observable behavior, such as an increase in realized selling and deeper losses among long-term holders.
However, if Bitcoin maintains a higher low and long-term holder aNUPL trends back toward zero, it may signal that selling pressure is being absorbed by more resilient investors. The data currently points to an ongoing bottoming process rather than a concluded cycle low.
ETF demand and on-chain dynamics offer important checkpoints, but a definitive bottom requires confirmation through lasting changes in price structure and investor behavior.
