Want Another Major Bull Market? Bitcoin Needs Trillions in Incremental Capital to Enter the Market

Written by: Ashrith Rao

Compiled by: Luffy, Foresight News

Since hitting an all-time high of $126,000 in October 2025, Bitcoin has accumulated a decline of 50%, with the current price near $63,000.

Recently, three on-chain data reports have been released successively, revealing that this decline differs fundamentally in structure from previous bear market corrections, something far beyond what a simple price chart can summarize.

Capital Efficiency Dilemma Has Become a Long-Term Reality, Difficult to Reverse in the Short Term

On July 1, CryptoQuant CEO Ki Young Ju released an in-depth report, fully reviewing the capital pulling efficiency of Bitcoin across various cycles, overturning the market's perception that "Bitcoin still has tenfold upside potential." The study compared the capital scale required for equivalent gains in each bull cycle, revealing extremely vast differences:

• In 2011, only $2.7 billion in net inflows spawned an astonishing 55,436% gain;
• In the 2018 to 2021 cycle, $36.5 billion in incremental capital drove approximately a 2,000% gain;
• In this cycle, a full $69.7 billion in realized market cap increment only yielded a 689% gain.

In 2011, only $5 million in new capital was needed to double the price; nowadays, to achieve an equivalent doubling trend, it is estimated that $101 billion in incremental inflows are required. This is no small matter; we must re-examine Bitcoin's growth logic. In the early years, millions in capital could move the market; now, only hundred-billion-level institutional capital can drive the broader market into a trend.

Ki Young Ju's calculation conclusion is quite severe: for Bitcoin to embark on a straight-line main uptrend again, at least $1 trillion in incremental capital needs to enter the market. This means Bitcoin can no longer rely solely on retail ETF small-scale capital speculation; it must become a core part of global major asset allocation.

Compared to gold's $27 trillion total market cap, Bitcoin currently has only a $1.3 trillion market cap, leaving ample theoretical growth space. However, the significant decline in capital pulling efficiency has caused the pace of this rise to be far slower than the 2017 and 2021 bull markets, making it significantly harder to replicate past hundredfold or tenfold gains.

Even if the scale of incoming capital hits a new historical high in the future, based on data patterns, the percentage gains of subsequent bull markets will be significantly lower than previous cycles. CryptoQuant's latest calculations have proven that it is difficult for Bitcoin to replicate the exaggerated gains of 2017.

Circulating Supply Continuously Depleting, A Mixed Blessing

Structural changes on Bitcoin's supply side have an impact on the current market situation even exceeding the capital efficiency logic. K33 Research released a report on June 15 showing that the proportion of long-term holder holdings to the total circulating supply hit a historical high of 79%.

Additionally, as of June 6, only 218,421 Bitcoins dormant for over two years underwent on-chain transfers, refreshing the lowest level since the same day in 2012, when only 70,600 dormant Bitcoins moved during the same period. For comparison, in the distribution phase of June 2024, 1.18 million Bitcoins were transferred out of cold wallets for selling.

Data from on-chain data tracking platform Alphractal also corroborates this trend: the proportion of long-term holder holdings increased from 74% in the previous cycle to the current 78%; in recent months, approximately 830,000 Bitcoins were transferred from short-term trading wallets to long-term dormant addresses.

K33 analyst Vetle Lunde stated that highly concentrated holdings, very few movements of dormant coins, and continuously shrinking trading volume are not the emergence of new selling pressure, but typical market characteristics of the late stage of a Bitcoin bear market. The logic is very intuitive: over 80% of Bitcoins are locked up long-term, and the market's tradable floating supply has shrunk significantly. Order book depth has become thinner; whether it is incremental buy orders from institutions, retail, or ETFs, it is easier to quickly drive price volatility.

Looking solely at the liquidity structure, market sentiment is optimistic, but this cannot determine whether incremental capital will enter the market as expected.

Multiple institutions including Bitfinex, Wintermute, and Glassnode have repeatedly emphasized that ETF capital inflows, stablecoin scale expansion, and institutional layout enthusiasm have not reached the level capable of supporting a long-term reversal. Tightening on the supply side is an important condition for bottoming out, but relying solely on supply scarcity is insufficient to confirm the market has bottomed.

CoinDesk data from late June shows that the total holdings of long-term floating loss holders reached 5.58 million coins, the second highest in history, second only to the March 2020 sharp decline phase. Interestingly, even though a large number of long-term holders are deeply trapped, the proportion of long-term holdings continues to rise, reflecting two coexisting sentiments in the market: firm holding and painful cutting of losses.

Profit/Loss Indicator Signals: Fourth Time Reaching Extreme Bottom Range Since 2022

On July 3, CryptoQuant released multiple on-chain indicators, among which the Realized Profit/Loss Ratio is the most critical.

Bitcoin's overall Realized Profit/Loss Ratio fell to -0.35, hitting a 43-month new low, benchmarking the deep bear market after the 2022 FTX collapse, when the price fell to below $16,000 at its lowest.

Historical data shows that after this indicator fell below -0.35, both the 2015 and 2019 bear markets ushered in large-scale reversal bull markets. This indicator statistics the network-wide token realized profit/loss distribution, intuitively reflecting that the market as a whole is in a state of comprehensive loss. A negative value represents that large-scale stop-loss selling pressure in the market has been fully released, rather than downside risk is imminent.

Interpreting in combination with the market background, on July 1 Bitcoin dipped to a low of $57,950, creating a low point in 652 days; subsequently rebounding 7%, it is currently oscillating in the $61,000–$63,000 range. Swan Bitcoin analyst Adam Livingston pointed out that the current price is only 16% higher than the network-wide Realized Price; historically after such a price spread appears, the average gain in half a year is 41%, and the average gain in one year is 81%.

Bitwise Chief Investment Officer Matt Hougan recently wrote about the MicroStrategy subsidiary STRC preferred stock redemption turmoil: in June the stock fell below the $100 par value, dropping to a low of $75, and the market began to question the long-term sustainability of Saylor's business model of issuing stock to accumulate coins and distribute dividends. However, Hougan believes that this risk clearance instead helped the market eliminate a large number of fragile speculative positions, and is not a precursor to a new round of systemic risk.

The market is currently repeatedly testing key support levels. This year Bitcoin tested the $60,000 threshold four times and held support each time; whenever selling pressure was released centrally, centralized exchanges continuously saw a daily net inflow of approximately 50,000 BTC, reflecting that selling pressure is gradually exhausting, rather than active large-scale cutting of losses. Looking at the daily and weekly candlestick patterns, the market is constructing a W-bottom reversal structure.

Analyst John Bollinger stated that the current price has retraced to the lower Bollinger Band, and a small fractal bottoming pattern has appeared within the large cycle. Once the $60,000 support is effectively broken, the next key support level falls in the $53,000 Realized Price range, which is also the core bear market bottom range that bottom-fishing capital must defend.

Macro Environment Suppressing Market

All on-chain supply and capital changes are built upon a bearish macro background. In June, US spot Bitcoin ETFs saw their worst monthly performance since listing, with BlackRock IBIT redemption scale ranking first in the industry, and total market net outflows exceeding $4.5 billion. K33 data shows the redemption speed has slowed, but capital has not turned to net inflows.

The change of Federal Reserve Chairman brings huge policy uncertainty; the market is repricing the policy expectations of Kevin Warsh leading the Federal Reserve, and interest rate trends have always been the core variable affecting Bitcoin's short-term market. June US employment data fell short of expectations, with only 57,000 new jobs added, far below the market expectation of over 100,000, and market rate cut expectations warmed up slightly.

European institutional supporting infrastructure is gradually improving. Germany's DZ Bank launched Bitcoin trading and custody services following the EU MiCA Act, and Deka Bank also plans to cover 340 savings banks in Germany to launch similar products. Institutional infrastructure is developing slowly but steadily on the periphery.

But this is more of a demand-driven factor, rather than a capital flow catalyst.

Conclusion

Combining all signals, if future economic growth becomes reality, then to achieve percentage growth comparable to previous cycles, the required institutional capital will far exceed previous cycles, because capital efficiency has declined.

Due to long-term holder concentration hitting a historical high, the market's tradable floating supply available to absorb this capital has shrunk significantly.

Large-scale stop-loss selling pressure in the market has basically been cleared, because the profit/loss indicator is at the lowest level in 43 months.

A single data point can only reflect local market characteristics; looking at all indicators combined, the market already possesses complete bottoming conditions, but the decisive variable — large-scale institutional incremental capital — has not yet landed.