Bitcoin's current setup reflects unprecedented conviction among long-term holders, with these investors demonstrating remarkable resilience during the ongoing correction. According to AMBCrypto, long-term holders (LTHs) now control 78% of Bitcoin's circulating supply, making their conviction a key factor in shaping Bitcoin's Q3-Q4 outlook. Despite the correction, LTH supply reached a record high in June, reinforcing the view that these investors continue to accumulate rather than exit. This behavior represents a significant departure from historical patterns, as long-term holders aren't selling into the weakness but are absorbing it, with the logic being that conviction in a risk-off market is often the hallmark of long-term strength. However, long-term holders remain highly sensitive to macroeconomic developments, as they tend to price in the broader economic outlook when positioning their portfolios, suggesting that Bitcoin's capitulation phase may not be over yet.
A critical on-chain metric has flashed a capitulation signal for the first time during the current Bitcoin correction, with the UTXO Block Profit/Loss Count Ratio falling into a range historically associated with bear-market conditions. According to CryptoQuant contributor Darkfost's analysis shared on X on June 29, this indicator measures the balance between Bitcoin transactions completed in profit and those completed at a loss by analyzing UTXOs - the transaction outputs that record coin ownership and cost basis on the Bitcoin blockchain. The declining ratio shows that more spent UTXOs are being realized at a loss than during earlier stages of the correction, marking a significant shift in investor behavior. As reported by CryptoQuant, this represents the first time this signal has triggered since the start of the correction, indicating that realized losses are becoming increasingly widespread across the network. Quinten François, a crypto analyst and co-founder of WeRate (now Lokal), confirmed on X on June 29: "This metric flashed at every bitcoin cycle bottom since 2016. And it just flashed again."
Bitcoin has posted three straight quarterly losses with an average decline of around 20% each quarter, marking the first three-quarter losing streak since the 2022 bear market, leaving more than 50% of Bitcoin's circulating supply underwater. According to AMBCrypto, Bitcoin's past bear markets provide a useful benchmark for the current cycle, with both the 2018 and 2022 bear cycles not bottoming until BTC had printed nine consecutive monthly red candles. The current cycle has produced seven consecutive monthly red candles so far, with historical patterns suggesting that Bitcoin's capitulation phase may still have room to run before a durable bottom is established. Andri Fauzan Adziima, research lead at Bitrue Research Institute, told Cointelegraph that Bitcoin's June close carried a signal consistent with prior cycles, stating that the month's finish above realized price but below the 200-week moving average "signals the bear bottom is still ahead per prior cycles."
Fed rate expectations have shifted noticeably, with 77% probability the Fed keeps rates unchanged for July and 23% odds of a 25-basis-point hike, while by September, markets are pricing 41% chance of no change, 47% probability of a 25 bps hike, and 10.5% chance of a 50 bps hike. According to AMBCrypto, markets are increasingly positioning for tighter financial conditions into the fall rather than the rate cuts many had anticipated, making Bitcoin's previous bear markets a relevant reference point. This shift in macroeconomic backdrop, combined with the expanding pool of underwater long-term holders, suggests that Bitcoin's capitulation phase may not be over yet. The $50,000 region by the end of Q3 could represent Bitcoin's final washout before a bottom takes shape, as the current cycle's pattern appears to be following historical precedents.
PlanB's argument centers on what he views as the relationship between price and realized price during bear markets, with the stock-to-flow analyst noting that Bitcoin's historical bear-market bottoms have not simply arrived after price fell below major moving averages; they also tended to appear after price moved to levels beneath realized price. According to Cointelegraph, PlanB highlighted that if Bitcoin breaks down below realized price, it would align with that prior pattern, referencing the possibility that Bitcoin could fall to $52,000, which would correspond closely with realized price. From an investor perspective, this distinction can be important because realized price is often used as an on-chain proxy for the average cost basis of coins in circulation. When market price trades above realized price, the market may still be able to bounce; when it slips below, the distribution of holders' costs versus current valuations tends to become more unfavorable, which can prolong bearish conditions. The current positioning - below the 200-week moving average but above realized price - has led analysts to frame the current range as transitional rather than conclusive, with traders and long-term holders watching whether Bitcoin can hold above realized price around $52,000 and whether weakness extends toward $55,000 support.
