Bitcoin Bear Market Enters Final Stage, Upward Momentum Remains Lacking

Retail selling pressure is about to exhaust, while large holders continue to accumulate Bitcoin, which has been in a downtrend for 9 months, leaving just two steps until a market reversal.

Written by: Ashrith Rao

Compiled by: Saoirse, Foresight News

After nine consecutive months of price decline, on-chain data for Bitcoin indicates that the market is approaching the end of the bear market.

This round of market activity has three major characteristic features: the cost basis of long-term and short-term holders has crossed at a critical point, the circulating supply has tightened unprecedentedly, and speculative funds have been persistently cutting losses. This analysis is entirely data-driven, studying the market's transition from deep losses to long-term capital accumulation, rather than relying on subjective emotional judgments.

Crossing Signals: Market Power Shift Completed

The most intuitive signal from the on-chain data dashboard is that the cost basis of long-term holders and short-term holders is converging, which serves as a highly valuable indicator.

In mid-July 2026, Bitcoin exhibited a classic bottoming indicator for bear markets: the realized price of short-term holders has been consistently declining compared to that of long-term holders. This reflects a collective stop-loss exit by short-term retail investors, rather than ordinary chart fluctuations.

Since the peak of this round of market activity, the average cost basis for short-term holders has plummeted from approximately $112,500 to $69,000. Long-term holders, typically more informed investors, have maintained a strong cost basis; meanwhile, recent large-scale sell-offs by incoming funds have directly caused a significant drop in the short-term cost basis.

Historical patterns show that such cost line crossings often signify the beginning of the final stage of a bear market. Retail investors with weak risk tolerance have been fully cleared from the market, while seasoned investors holding the chips begin to dominate the subsequent market direction.

If the crossing state can be maintained over the long term, it indicates that the bottoming process has officially begun, with a sustained three-day hold above the crossing range being an important confirmation standard.

Supply Contraction: 84% Chip Barrier Formed

The crossing of long and short cost bases essentially reflects a shift in market chip power dynamics, and the underlying supply structure can corroborate this change.

According to statistics from Alphractal, the proportion of Bitcoin held by long-term holders has reached a historic high of 84%. This marks the first time since 2016 that short-term traders have only 16% of the total circulating liquidity available. The total long-term holdings are 5.2 times that of short-term circulating chips, demonstrating that mature investors are committed to accumulating during the market downturn, with strong confidence in their holdings.

The scarcity of circulating chips has created a unique market landscape: current market liquidity is at a historical low, and if market demand experiences a significant increase, Bitcoin prices are likely to see dramatic fluctuations. Data from the crypto quantitative research firm CryptoQuant supports this assessment: in May of this year, the net increase in holdings for long-term holders reached a six-year peak, with a cumulative addition of 1.29 million Bitcoins.

Another notable feature of the chip structure is that, aside from chips held for 6 to 12 months transitioning in large quantities to long-term holdings, all other circulating chips across different holding periods are continuously decreasing, with speculative funds consistently withdrawing.

Bottom Signal Confirmation: Panic Selling Countdown Begins

Combining the scale of loss-making chips with the realized market value variance (RCV) model can corroborate that the market is in the late stages of a bear market.

K33 Research Institute provides key data: on June 5, the proportion of circulating Bitcoin chips in a loss state broke the 50% critical line; this ratio has now fallen to 46%. Historically, when the proportion of loss-making chips peaks and then falls below 50%, the subsequent bottoming cycle typically lasts between 13 to 101 days, and we have now entered the countdown to the bottom. This round of bottoming has lasted the second longest in history, indicating that the worst phase of the market is likely over, rather than just beginning.

CryptoQuant's calculated realized market value variance Z value is -2.35, placing it in the extreme low range of the historical bottom 6%. This indicates that the current market is generally experiencing thin profits. Reviewing history, such ranges often precede significant gains.

Currently, various indicators are gradually resonating, and prices have fully digested valuation pressures and macroeconomic headwinds, yet the market still lacks a clear entry point for buyers.

Risk Warning: Market Reversal Requires Multiple Conditions to be Met

Although the long-term chip and fundamental data lean towards a favorable outlook, various momentum technical indicators are still raising alarms.

The overall momentum indicators for short-term holdings remain bearish, but the lows are gradually rising; the bullish sentiment index is currently only at 20, still significantly below the 60 threshold needed for sustained upward support. Currently, two key dynamic resistance levels—the real market average price and the average cost basis of short-term holders—have not successfully broken through.

Glassnode suggests that to confirm a complete reversal of the bull-bear trend, two prerequisites must be met: the pressure from retail panic selling must further ease, and institutional fund flows must stabilize positively. Several models estimate that if Bitcoin miners continue to sell off for cash, the price could drop to $47,000; if it fails to break through the short-term high cost basis, the market is likely to retreat to around $58,000 to seek support.

Overall, the market low is nearly in sight, but the bottom has not yet been fully established. Various data indicate that the market is in the final structured phase of a slow recovery from the low point. While the complete reversal logic has not yet been fully constructed, the foundational conditions for bottoming are gradually being established.