Bitcoin Bear Market Enters Final Stage, Chip Structure Improves but Upward Momentum Remains Lacking

Written by: Ashrith Rao

Compiled by: Saoirse, Foresight News

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

This market cycle has three hallmark characteristics: a key crossover in the cost basis of long-term and short-term holders, an unprecedented tightening of circulating supply, and a prolonged and continuous exit of speculative capital at a loss. This analysis is based entirely on data, studying the entire process of the market transitioning from the pain of deep losses to long-term capital accumulation, rather than subjective emotional judgment.

Crossover Signal: Market Pricing Power Completes Transition

The most intuitive signal on the on-chain data dashboard is: the cost basis of long-term holders and short-term holders is converging, which is a highly valuable barometer.

In mid-July 2026, Bitcoin exhibited a classic bear market bottoming indicator: the realized price of short-term holders continued to decline relative to long-term holders. This signifies short-term retail investors collectively cutting losses and exiting, absolutely not ordinary chart fluctuations.

Since the high of this market cycle, the average cost basis of short-term holders has plummeted from approximately $112,500 to $69,000. Long-term holders are mostly mature investors with access to more market information, and their cost basis has remained firm; whereas large-scale selling by recently entered capital has directly caused a sharp dive in short-term cost basis.

Historical patterns show that this kind of cost basis crossover often signals the opening of the final stage of a bear market. Retail investors with weak risk tolerance are fully cleared out by the market, and seasoned investors holding coins begin to dominate the subsequent market direction.

If the crossover state can be maintained for a long period, it represents the formal commencement of the bottoming process, wherein staying within the crossover zone for three consecutive days is an important confirmation criterion.

Supply Contraction: 84% Holdings Barrier Forms

The crossover of long and short cost basis is essentially a shift in market control over coins, and the underlying supply structure can corroborate this change.

Alphractal statistical data shows that the share of Bitcoin held by long-term holders hit a historic 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 coins, sufficient to prove that mature investors insist on adding positions and have sufficient confidence in holding during the market weakening phase.

Scarcity of circulating coins creates a special market pattern: current market liquidity is at a historic low; as long as market demand sees a significant increase, Bitcoin price is highly likely to experience significant volatility. Data from crypto quantitative research institution CryptoQuant corroborates this judgment: this May, long-term holder net accumulation hit a six-year peak, cumulatively increasing holdings by 1.29 million Bitcoin.

The coin structure has another obvious characteristic: except for coins held for 6 to 12 months which are transitioning to long-term holdings in large batches, circulating coins of all other holding periods are continuously decreasing, and speculative capital is constantly withdrawing.

Bottom Signal Confirmation: Panic Selling Enters Countdown

Combining the scale of coins at a loss and the Realized Cap Variance (RCV) model, it can corroborate that the market is in the late stage of a bear market.

K33 Research Institute provides key data: on June 5, the percentage of Bitcoin circulating coins at a loss broke through the 50% critical line; currently this ratio has fallen back to 46%. Looking back at history, when the percentage of coins at a loss peaks and falls back below 50%, the subsequent bottoming period is generally between 13 days to 101 days, and currently it has entered the bottom countdown. The duration of this bottoming cycle ranks second in history, and various signs indicate that the worst phase of the market has most likely ended, rather than the decline just beginning.

The Realized Cap Variance Z-Score calculated by CryptoQuant is -2.35, this value is at an extreme low in the historical bottom 6%. This means that currently the market is generally seeing minimal profits. Reviewing history, such intervals are often the precursor stage for subsequent large gains.

Currently various indicators are gradually resonating, price has fully absorbed valuation pressure and macro environment headwinds, but the market still has not shown clear entry buy points.

Risk Reminder: Market Reversal Still Requires Multiple Conditions to Be Met

Although fundamental data such as long-term holdings leans positive, various momentum technical indicators are still sounding alarms.

Short-term holding momentum indicators overall still lean bearish, but lows are continuously rising; the Bull Sentiment Index is currently only 20, still a large gap from the 60 boundary line needed to support sustained rises. Currently, price has failed to successfully break through two key dynamic resistance levels — the Realized Price and the Short-Term Holder Average Cost Basis.

Glassnode proposes that to confirm a complete reversal of the bull-bear trend, two prerequisites are needed: further relief of retail panic selling pressure, and institutional capital flow stabilizing and improving. Multiple models calculate that if Bitcoin miners continue to sell for cash, the price may drop to $47,000; if unable to break upward through the short-term high cost basis, the market price is highly likely to fall back to near $58,000 to seek support.

Overall, market lows are already close at hand, but the bottom has not been fully confirmed. Various data indicate the market is in the final structural stage of slow recovery from lows. Although the complete reversal logic has not been fully established, the various foundational conditions for bottoming are falling into place one by one.