Bitcoin Enters Accumulation Phase as Liveliness Metric Reverses

According to on-chain analyst Axel Adler Jr., Bitcoin’s Entity-Adjusted Liveliness metric reached a peak of 0.02676 in December 2025 and has since started to decline. This technical indicator tracks the ratio of spent coin days to created coin days, with a filter applied to remove transfers within the same holder, providing a clearer view of genuine market activity. Adler’s analysis, published on February 17, draws parallels to past cycles in 2020 and 2022, where a similar peak in the metric occurred shortly after price highs, followed by a downward trend during accumulation periods lasting between 1.1 and 2.5 years.

The analyst notes that the metric tends to lag price movements because it is cumulative. Bitcoin’s price surpassed $126,000 in October 2025 before experiencing a decline of approximately 45%. Current liveliness readings remain below short-term averages, which Adler interprets as a sign of an early-stage transition rather than a confirmed full trend. He adds that a further decline in the 90-day average below the 365-day line would strengthen the case for a prolonged reset phase, suggesting investors should prepare for an extended period of accumulation rather than anticipating a swift recovery.

Despite the on-chain signal pointing to a multi-year accumulation phase, analysts are divided on the potential severity of the current market downturn. Matt Hougan of Bitwise argues that the present crypto slump is milder than previous cycles, such as the brutal declines of 2018 or 2022. In a recent interview, Hougan cited stronger market infrastructure, the emergence of spot Bitcoin exchange-traded funds (ETFs), and increased institutional participation from major firms like BlackRock and Apollo as key factors supporting his stance.

This perspective finds some support in retail behavior data. Coinbase CEO Brian Armstrong noted that balances held on the platform by smaller investors in February have matched or exceeded levels recorded in December 2025, indicating retail investors are actively buying the dip. The broader crypto market capitalization has fallen by about 49% from its peak near $4.4 trillion in October 2025, a drawdown that is notably less steep than the 88% wipeout in 2018 or the 73% drop in 2022.

However, caution persists among other commentators. Analyst Mippo has suggested that current conditions could still develop into a prolonged ‘crypto winter’ as asset valuations adjust to clearer regulatory frameworks and a greater market focus on fundamental revenue generation. This highlights the ongoing tension between optimistic structural developments and the potential for a drawn-out period of price consolidation.

Additional on-chain metrics provide further nuance to the market’s complex picture. Joao Wedson of Alphractal recently highlighted that the Net Unrealized Profit/Loss (NUPL) for Bitcoin’s long-term holders currently sits around 0.36. This positive figure indicates that, on aggregate, these patient investors remain in a profitable position on their holdings.

This metric is historically significant. According to Wedson’s analysis, major Bitcoin rallies have typically only begun after the NUPL for long-term holders turned negative, a point when even the most steadfast investors face unrealized losses. The current positive reading suggests that, while the Entity-Adjusted Liveliness signals a shift to accumulation, the market may not yet be in the deeply oversold territory that has historically preceded explosive bull runs.

The central question for market participants, therefore, revolves around the interplay between traditional on-chain cycle models and new market dynamics. Analyst Axel Adler Jr.’s warning of a multi-year reset based on the liveliness metric presents a historically grounded outlook. Yet, the unprecedented institutional demand channeled through Bitcoin ETFs, as noted by Matt Hougan, represents a powerful new variable that could potentially compress or alter the duration of this accumulation phase, setting the stage for a cycle that diverges from past precedents.