BTC Market Faces Consolidation Phase Before a Sustained Uptrend Takes Hold in Q3

Recent analysis from Kong Jianping, founder of Nano Labs, reveals critical insights into Bitcoin’s current market structure. According to on-chain data, 2025 has witnessed an unprecedented liquidation wave from long-term holders, with 1.14 million BTC entering the market over a 30-day period—representing nearly $300 billion in circulating supply. This massive sell-off marks a significant market event that warrants deeper examination into what comes next for BTC’s price action.

The Historic Holder Capitulation and Its Implications

The scale of this liquidation is historically significant. When long-term investors collectively exit positions, it typically signals either exhaustion selling or strategic repositioning ahead of major moves. The on-chain metrics paint a fascinating picture: after the long-term to short-term holder supply ratio dipped to -0.53, this negative reading traditionally indicates the market has reached a critical juncture. Rather than spelling doom, such extreme readings often precede capitulation bottoms—moments when selling pressure becomes so intense that it paradoxically sets the stage for recovery.

As of late January 2026, Bitcoin is trading at $88.75K, showing relatively modest volatility at -0.05% over 24 hours despite the turbulent backdrop. With $1.25B in daily trading volume and a circulation market cap of $1.77 trillion across 19.98 million BTC in circulation, the market has absorbed the liquidation wave without collapsing—a bullish sign in itself.

The Consolidation Window and When Sustained Gains May Emerge

Kong’s analysis suggests that meaningful upside may remain dormant through the first half of 2026. Q1 and Q2 could see sideways price action and continued equilibrium-building as buyers and sellers balance forces. This consolidation phase is actually healthy; it allows the market to reset sentiment after such an intense holder exodus.

However, the real catalyst for a sustained rally may not arrive until Q3 2026. By that time, on-chain metrics should show sufficient absorption of supply, sentiment normalization, and likely catalysts (such as regulatory clarity or institutional positioning). Historical patterns suggest that after such violent selling, genuine sustained uptrends often emerge once supply has been fully digested and holder conviction rebuilds.

The Key Indicator to Watch

The long-term/short-term holder ratio will be critical. As selling pressure continues weakening—a trend already observable in recent on-chain data—expect this metric to eventually turn positive again. That inflection point could signal the beginning of a sustained recovery that extends well beyond simple relief bounces. Until then, patience and accumulation during sideways trading may be the wisest approach for long-term participants.