The biggest question for Bitcoin (BTC) investors is whether the market bottomed in early February. At that time, the world's largest digital currency briefly dropped to nearly 60,000 USD.
No single indicator can definitively answer this. However, James Van Straten, a senior analyst at CoinDesk, cites data suggesting the most pessimistic phase of the current correction may be over, especially as Bitcoin has now recovered above 77,000 USD.
One key indicator is realized cap. This metric measures the total value of BTC based on the price at which each coin was last moved on the blockchain. Unlike market capitalization, which uses the current price, realized cap reflects the aggregate cost basis of investors. Therefore, it is often used to track capital flows into or out of the network.
Realized cap peaked near 1,120 billion USD before dropping to about 1,080 billion USD when Bitcoin lost over 50% from its record high in 10/2025. This significant asset evaporation ranks among the largest ever recorded. However, this indicator has now started to stabilize and form a base, similar to the pattern seen at the bottom of the 2022 downtrend market.
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A symbolic Bitcoin coin is placed in front of a screen illustrating its market value. Photo: Reuters |
A second indicator is the RHODL ratio. This metric compares the amount of assets held by long-term investors (from six months to two years) with those new to the market (from one day to three months). The RHODL ratio is currently above five times, the third highest level in history.
The only two times this indicator was higher were at the cycle bottoms in 2015 and 2022. This suggests that Bitcoin supply remains primarily in the hands of long-term investors. Since February, the amount of BTC controlled by long-term holders has increased by over 400,000 units.
Finally, the perpetual futures funding rate, a payment between buyers and sellers to keep futures contract prices aligned with spot prices, also provides insight. From February to May, the funding rate remained negative, one of the longest periods on record.
A negative funding rate means that those betting on price declines are paying fees to those betting on price increases to maintain their positions. If this situation persists, it indicates that the majority of traders are strongly leaning towards a continued Bitcoin decline. When too many people short sell, the market can become overly pessimistic. At this point, even a slight price recovery can force short positions to close, generating additional buying pressure. These conditions often appear when the market bottoms, as selling pressure has gradually exhausted.
Similar scenarios occurred during the Silicon Valley Bank crisis in 3/2023, the yen carry trade unwinding in 8/2024, and the tariff-driven sell-off in 4/2025. "All these periods ultimately marked significant Bitcoin bottoming zones," noted the senior analyst at CoinDesk.
However, Bitcoin being pushed below the 80,000 USD region is causing many investors to worry that the price could enter a new, deeper decline.
According to a report by K33 Research, an analytics unit of a Nordic digital asset brokerage and custody firm, Bitcoin's current cycle differs considerably from the sharp crashes seen in 2014, 2018, and 2022. In previous cycles, after being halted at key technical levels, BTC often surged strongly before quickly reversing. Those rallies were primarily driven by investors using excessive leverage and betting on price increases, making the market vulnerable to collapse when buying power weakened.
This time, the dynamics are different. Vetle Lunde, head of research at K33, believes the current recovery is slow and has not created the same excessive euphoria as before. Derivatives data even indicates a highly pessimistic market sentiment.
Nevertheless, K33 notes there are still notable risks. The volume of open derivative positions remains high, so if Bitcoin declines further, the market could experience another volatile period. Simultaneously, spot Bitcoin ETFs in the US saw 1.6 billion USD in net outflows last week, even as the digital currency approached the 83,000 USD region.
According to K33, historically, after a prolonged period of losses, investors tend to sell aggressively when prices recover near their breakeven point. This pattern appears to be repeating.
However, K33 maintains the view that the drop to near 60,000 USD in February was likely the deepest decline of the current cycle.
Tieu Gu (via CoinDesk)
