Understanding Bitcoin’s Market Dynamics: A Current Overview
Bitcoin (BTC) has experienced a notable decline, receding from its six-figure highs to a range of $70,000 – $80,000. This shift is attributed primarily to profit realization and diminishing inflows. As the selling intensified, Bitcoin approached a critical on-chain support, hovering approximately 18% above the $55,000 realized price. Historically, during bear markets, Bitcoin often trades 24–30% below its realized price, a threshold not yet reached in the current cycle. This situation indicates that a complete capitulation within the market has not materialized.
In response to the price pressures, the Net Unrealized Profit/Loss (NUPL) fell within the 0.20–0.30 zone, reflecting a compression of unrealized profits. This index stayed above 0.0, avoiding the negative levels seen in prior market bottoms. Such behavior signals that panicked loss distribution has not yet occurred. Concurrently, the Market Value to Realized Value (MVRV) eased to around 2.0, indicating a decline in valuations due to profit reduction. However, it remained above the critical sub-10 capitulation band, suggesting that many holders still maintain profitability. This limited forced selling has enabled Bitcoin to stabilize and potentially build a base for future recovery.
Throughout 2023 and early 2024, Bitcoin’s structural rally was supported by robust capital absorption, with the Realized Capital Impulse holding above +2.0. During this period, Bitcoin’s price surged from below $30,000 to a peak near $100,000, with considerable capital inflows driven by ETF investments and institutional allocations. Long-term holders also absorbed circulating supply, creating a strong confidence and demand environment that buoyed higher valuations. However, as the cycle progressed into late 2025, momentum slowed, with impulse peaks declining from above +4.5 to around +2.0, even as the price approached the $100,000 mark.
This decline signified that new capital injection into the market had diminished, with profit realization outpacing fresh accumulation. As capital expansion further cooled down, the impulse eventually compressed towards 0.0 and turned negative in early 2026, highlighting a structural contraction of capital. With an abundance of supply still in circulation, Bitcoin’s price softened to the $85,000–$90,000 range, reflecting weakened demand strength. Future recovery heavily relies on renewed ETF inflows and macro liquidity expansion, while ongoing deterioration in inflow could extend the corrective phase.
A closer analysis of on-chain stress indicators suggests a maturation of the Bitcoin cycle. At present, about 50% of the circulating supply remains profitable, signifying that unrealized gains have decreased amidst weakening demand buffers. The Short-Term Holder MVRV near 0.95 indicates that recent buyers are holding losses, contributing to a sense of panic-driven selling. Conversely, the more stable Long-Term Holder realized cap hints at enduring long-term conviction within the Bitcoin market.
This spending behavior paints a picture of stress transfer among market participants. Recent data shows that Short-Term Holders (STHs) have sent over 100,000 BTC to exchanges, indicating forced distribution and rising realized losses. However, indications of increased Accumulation Trend Scores suggest that dip-buying activity is emerging, signaling potential market recovery. Traditional exchange flows frame the liquidity context—while capitulation inflows appeared during price dips, thematic outflows indicate a tightening of supply. Additionally, thinning spot volumes and ETF outflows underscore a defensive consolidation stage, waiting for renewed capital inflows.
In conclusion, Bitcoin’s current correction suggests structural cooling rather than outright capitulation. Weakening inflows and profit compression have eroded demand above the realized support level. The interplay of short-term stress and emerging accumulation leaves Bitcoin’s recovery dependent upon renewed capital and macro liquidity expansion. As the market transitions, supporters and investors alike will keenly anticipate developments that may tip the balance back towards bullish trends for Bitcoin.
