On-chain data reveals that the amount of Bitcoin (BTC) held in profit is approaching levels last seen during the depths of the previous bear market, a development one analyst interprets as a signal of significant undervaluation.
According to a Thursday analysis from CryptoQuant’s “Darkfost,” approximately 11.2 million BTC are currently in a state of profit. For context, the previous bear market’s lowest point saw only 9 million BTC in profit. Conversely, about 8.2 million BTC are now held at a loss, a figure confirmed by Glassnode data to be at levels not witnessed since late 2022.
“This is quite significant, considering that during the last bear market this figure reached about 10.6 million BTC,” Darkfost noted, referring to the supply at a loss. The convergence of these metrics toward their historical bear market extremes suggests the market may be nearing a bottom. “This suggests that the market is reaching a notable level of undervaluation, comparable to the conditions observed during the previous bear market,” the analyst added, pointing to metrics like net unrealized profit/loss (NUPL) and the market value to realized value (MVRV) ratio as supporting indicators.
Divergent Analyst Interpretations on Market Signals
However, not all analysts view this data as a definitive buy signal. Andri Fauzan Adziima, research lead at the Bitrue exchange, argues the current figures reflect “increasing market stress, not immediate undervaluation.”
He contrasts the current environment with true capitulation bottoms, where the supply in loss exceeded 50% and the supply in profit dropped to 45% or lower, with NUPL and MVRV ratios hitting “extremes.” “Current data points to early/mid-bear transition (potential structural bottom near $55,000), with more downside or consolidation likely before a full reset,” Adziima cautioned.
This debate occurs as Bitcoin has fallen roughly 52% from its current cycle all-time high. This drawdown is notably milder than the 77% to 84% declines witnessed at the end of the 2018 and 2022 bear markets, leaving room for interpretation on whether the current cycle will follow a similar pattern.
Macro Headwinds: The Strong Dollar’s Impact
Beyond on-chain metrics, broader macroeconomic forces are cited as a persistent headwind. Author and analyst Timothy Peterson commented on the social platform X that Bitcoin “tends to struggle when the dollar is strong, and the Chinese yuan is weak.”
He attributes this dynamic to tighter global liquidity conditions. Higher yields on U.S. dollar-denominated assets attract capital away from risk assets like Bitcoin into cash and bonds. Simultaneously, cautious investor sentiment is fueled by China’s monetary easing, which weakens the yuan. Peterson posits that a sustained Bitcoin recovery is unlikely until U.S. interest rates fall and the “dollar yield loses its attractiveness,” a shift he does not foresee until the second half of 2026 or more likely 2027.
This macro view is reflected in the U.S. Dollar Index (DXY), which has strengthened by about 5% over the past two months, according to TradingView data. A rising DXY typically pressures Bitcoin and other risk assets as it signals tightening financial conditions and a flight to safety.
Ultimately, while on-chain metrics are flashing warning signs familiar from past bear markets, the interaction with a stubbornly strong dollar and a less severe price correction creates a complex picture. Whether current conditions represent a final capitulation phase or a prolonged mid-cycle consolidation remains a central question for market observers.
