Bitcoin's bear market is entering its final phase, with bullish momentum still lacking despite favorable supply dynamics.

By Ashrith Rao

Translated by: Saoirse, Foresight News

After nine consecutive months of price declines, on-chain Bitcoin data indicates the market has reached the tail end of the bear cycle.

This market cycle exhibits three defining characteristics: a critical crossover between the holding costs of long-term and short-term holders, an unprecedented tightening of circulating supply, and prolonged, sustained capitulation by speculative capital. This analysis is entirely data-driven, tracing the market’s transition from deep-loss pain to long-term investors accumulating positions—free from subjective or emotional bias.

The most direct signal from on-chain data panels is that the holding costs of long-term and short-term holders are converging—an extremely valuable leading indicator.

In mid-July 2026, Bitcoin exhibited a classic bear-market bottoming signal: the realized holding price of short-term holders continued to fall relative to that of long-term holders. This reflects mass stop-loss exits by retail traders—not ordinary chart volatility.

Since the peak of this market cycle, the average holding cost for short-term holders has dropped sharply from approximately USD 112,500 to USD 69,000. Long-term holders, typically more informed and experienced investors, have maintained resilient holding costs; meanwhile, large-scale selling by recent entrants has directly caused the sharp decline in short-term holding costs.

Historical patterns show that such a cost-line crossover often signals the onset of the final stage of a bear market. Risk-averse retail investors are fully flushed out, and seasoned investors—who now hold the majority of supply—begin steering the market’s next phase.

If this crossover state persists over time, it signifies the formal start of a market bottoming process, with a key confirmation criterion being three consecutive days of stable prices within the crossover range.

The crossover in holding costs between long- and short-term holders fundamentally represents a transfer of market influence, a shift further validated by underlying supply dynamics.

According to Alphractal data, long-term holders now account for a record-high 84% of Bitcoin’s supply. This marks the first time since 2016 that short-term traders have access to only 16% of total circulating liquidity. With long-term holdings exceeding short-term tradable supply by a factor of 5.2, it is clear that sophisticated investors have been consistently adding to positions during market weakness, demonstrating strong conviction.

Scarce circulating supply has created a unique market structure: current market liquidity is at a historical low, and if demand surges significantly, Bitcoin prices are highly likely to experience sharp volatility. Data from crypto quantitative research firm CryptoQuant supports this view: in May this year, net holdings by long-term holders reached a six-year high, with cumulative purchases of 1.29 million Bitcoins.

The supply structure exhibits another clear characteristic: aside from coins held for 6 to 12 months, which are being converted en masse into long-term holdings, circulating supply across all other holding durations continues to decline as speculative capital steadily exits the market.

Combining the scale of coins trading at a loss with the Realized Cap HODL Waves (RCV) model confirms that the market is in the late stage of a bear cycle.

Research firm K33 provides key data: on June 5, the proportion of circulating Bitcoin supply trading at a loss crossed the critical 50% threshold; this ratio has since declined to 46%. Historically, when this metric peaks and falls below 50%, subsequent bottoming periods typically last between 13 and 101 days. We are now entering the final countdown to a market bottom. This consolidation phase is the second-longest on record, strongly suggesting that the worst of the downturn has likely already passed—not that the decline has just begun.

CryptoQuant’s calculated Z-score for realized cap variance stands at -2.35, placing it in the lowest 6% of historical values—an extreme low. This indicates that market participants are currently experiencing minimal profits. Historical analysis shows that such conditions often precede periods of substantial future returns.

Various indicators are now gradually converging, and price has fully priced in valuation pressures and macroeconomic headwinds, yet the market still lacks a clear entry point for buyers.

Although fundamental metrics such as long-term holder accumulation lean bullish, momentum-based technical indicators continue to sound alarms.

Short-term holder momentum indicators remain broadly bearish, though their lows are progressively rising. The current bull sentiment index stands at just 20, significantly below the 60 threshold typically needed to sustain an upward trend. Price has also failed to break through two key dynamic resistance levels—the realized price average and the short-term holder average cost basis.

Glassnode noted that confirming a full reversal of the bull-bear trend requires two conditions: further easing of retail panic selling pressure and sustained, positive institutional capital flows. Multiple models estimate that if Bitcoin miners continue selling to cash out, the price could drop to $47,000; if it fails to break above the short-term high's holding cost, the market is likely to retreat and seek support near $58,000.

Overall, the market low appears imminent but has not yet been fully confirmed. Various indicators suggest the market is in the final structural phase of a gradual recovery from its lows. Although the complete reversal logic has not yet been fully established, the foundational conditions for bottoming out are progressively falling into place.

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