The first cryptocurrency has been trading below the average market price and the cost basis of short-term holders for five months now. According to on-chain analytics, this is one of the longest periods of "deep undervaluation" of the asset on record. This situation signals that the market is in a phase of extreme pressure, where the price has significantly diverged from fundamental metrics.
Capitulation of Long-Term Investors: Record Losses
Long-term holders are actively realizing losses, now accounting for 43% of the total realized volume on the network. Daily losses for this category of participants reach approximately $280 million — the highest since December 2022. This behavior is classified as capitulation, which historically often precedes the formation of a price bottom. This confirms that even the most resilient investors are unable to withstand the current pressure, a characteristic sign of the final phase of a bear market.
At the same time, a steady outflow of capital from U.S. spot Bitcoin ETFs is being recorded. On July 8, net withdrawals amounted to $84.86 million. Trading volumes in this sector have fallen by 80% compared to peak values from last fall, indicating a decline in institutional interest and overall market weakness.
Contrast in the Ethereum Market and Macroeconomic Background
Meanwhile, in the Ethereum ETF segment, the opposite picture is emerging: capital inflows have been recorded for the fifth consecutive day. This suggests that investors are reallocating funds in favor of the altcoin, possibly anticipating a faster recovery or the emergence of new catalysts.
Experts at QCP Capital note that the market lacks a "monetary cushion." Weakness in the U.S. labor market and persistently high inflation limit the Federal Reserve's ability to ease policy, putting additional pressure on risk assets, including cryptocurrencies.
Conditions for a Trend Reversal
Despite the grim picture, according to blockchain and derivatives data, conditions for a trend reversal have already formed. However, to confirm a rally, Bitcoin needs to consolidate above the $76,600 mark, and selling by large players must significantly decrease. For now, the price remains in a zone of uncertainty, and any positive scenario will require overcoming these key levels.
Recall that earlier analysts pointed to the risk of the first cryptocurrency falling below $58,000. On July 8, the price of Bitcoin had already dropped to ~$61,700 amid escalating geopolitical tensions between the U.S. and Iran. In current conditions, the market remains extremely sensitive to external shocks, and the formation of a bottom may take longer than expected.
My professional commentary: Capitulation by long-term holders is a powerful but not guaranteed bottom signal. For a confident reversal, we need to see stabilization in ETF flows and a reduction in geopolitical risks. For now, Bitcoin is teetering on the edge, and investors should be prepared for increased volatility.