Bitcoin’s bear market has entered its final stage, and bullish upside momentum from chip distribution remains lacking.

Written by: Ashrith Rao

Compiled by: Saoirse, Foresight News

After nine consecutive months of price declines, on-chain data shows that the market is approaching the end of the bear phase.

This cycle has three notable features: the key crossover of the cost basis for long- and short-term holders’ positions, an unprecedented tightening in circulating supply, and speculative capital consistently cutting losses and exiting the market over a long period. This analysis is based entirely on data. It studies the full process of how the market transitions from the pain of deep unrealized losses to long-term investors accumulating coins—not subjective, emotional judgment.

Crossover signal: the baton of market influence changes hands

The most direct signal from on-chain data dashboards is that the cost basis of long-term holders and short-term holders is converging—an especially valuable market barometer.

In mid-July 2026, Bitcoin displayed a classic bear-market bottoming indicator: the realized price of short-term holders’ positions continued to decline relative to that of long-term holders. Behind this is the collective realization of losses by short-term retail traders and their exit from the market—far beyond ordinary chart fluctuations.

Since the peak of this cycle, the average cost basis of short-term holders fell sharply from about $112,500 to $69,000. Long-term holders are mostly mature investors who have more information about the market, and their cost basis has remained firm. Meanwhile, large-scale selling by recently entered capital directly caused the short-term cost basis to drop significantly.

Historical patterns suggest that when these cost lines cross, it often signals that the final stage of a bear market has begun. Risk-tolerance is weak among retail participants, and the market fully flushes them out; veteran investors holding the chips then start to dominate the market’s next direction.

If the crossover condition can be sustained for a long time, it would indicate that the bottoming process has officially started. A key confirmation is maintaining the crossover range for three consecutive days.

Supply contraction: 84% of the “chip wall” formed

The crossover in long- and short-term cost basis, at its core, reflects a change in who controls market “chips,” and the underlying supply structure can confirm this shift.

Alphractal statistics show that the share of holdings for Bitcoin long-term holders hit a historical high, reaching 84%. This is the first time since 2016 that the circulating liquidity available to short-term traders is only 16% of the total. The total long-term holdings are 5.2 times the short-term circulating supply, sufficiently proving that mature investors have continued to add positions during the market’s weakening phase with strong confidence in their holdings.

The scarcity of circulating chips creates a special market setup: when liquidity is at a historical low, if market demand increases sharply, Bitcoin’s price is likely to experience violent volatility. Data from CryptoQuant, a crypto quantitative research firm, supports this view: in May this year, long-term holders’ net position increase set a six-year peak, with a cumulative accumulation of 1.29 million BTC.

There is another clear feature in the chip structure: besides the chips with a holding duration of 6 to 12 months that are being transferred in large volumes to long-term holdings, the circulating chips for every other holding period continue to decrease, as speculative capital keeps withdrawing.

Bottoming signal confirmed: panic selling enters the countdown

By combining the scale of loss-making chips with the Realized Cap Volatility (RCV) model, it can be supported that the market is in the late stage of a bear market.

K33 Research provided key data: on June 5, the share of circulating Bitcoin chips in a loss state broke above the 50% threshold line; currently, the share has fallen back to 46%. Looking back at history, when the proportion of loss-making chips spikes and then falls back below 50%, the subsequent bottoming cycles typically last from 13 days to 101 days—and the market is already in the countdown to the bottom. The duration of the grinding-down cycle this time ranks second in history, and multiple signs suggest the worst stage of the行情 is likely already over, rather than the decline just beginning.

CryptoQuant’s calculation of the realized cap volatility Z-value is -2.35, placing it in the extreme low range of the bottom 6% historically. This means that profits in the current market are generally small. Revisiting historical cases, this kind of range often acts as a precursor stage before subsequent large gains.

At present, various indicators are gradually converging; the price has already fully absorbed valuation pressure and macro negative catalysts, but the market still has not shown a clear entry buy point.

Risk reminder: a trend reversal still requires multiple conditions

Although fundamental data for long-term chips is relatively bullish, various momentum technical indicators are still sounding alarms.

Short-term position momentum indicators remain overall bearish, but the lows are continuously being raised. The long-side sentiment index is currently only 20, still far from the 60 threshold needed for persistent support upward. At present, the two major dynamic resistance levels—real market average price and the average cost basis of short-term holders—have not managed to break through successfully.

Glassnode suggests that to confirm a complete reversal of the bull-bear trend, two prerequisites are needed: further relief in the pressure from retail panic selling, and stable positive improvement in institutional capital flows. Multiple model calculations indicate that if Bitcoin miners continue to sell for cash, the coin price could drop to around $47,000; if it cannot break upward above the cost basis of short-term holdings at high levels, the market will likely pull back to seek support around the $58,000 area.

Overall, the market’s low point is close, but the bottom has not been fully confirmed yet. The data shows that the market is in the final structural phase of slow repair from the lows. The complete logic for a full reversal has not been fully established, but the foundational conditions for bottoming are being met one by one.