Bitcoin Nears Long-Term Holder Pain Point as Losses Mount

Analysis from CryptoQuant highlights a crucial metric for understanding Bitcoin’s current downturn: the long-term holder (LTH) cost basis. According to CryptoQuant analyst ‘Darkfost,’ this cohort, known for its resilience to short-term price swings, is currently sitting on an average profit of roughly 74%. However, this margin is rapidly declining as Bitcoin’s price approaches their aggregate cost basis, estimated at around $38,900. This level is not just a number; it represents a historical pain point that has defined previous bear market cycles.

Darkfost’s examination of historical cycles reveals a consistent pattern. Each major bear market has been characterized by the price breaking decisively below the LTH cost basis. This breach typically “trigger[s] a final capitulation phase marked by realized losses of around 20%.” Only after this painful event, which signifies maximum pessimism and capital destruction, do markets begin their recovery and transition into a new bull phase. The current trajectory suggests Bitcoin is drifting toward this critical juncture once more.

This analysis is corroborated by stark data from leading analytics firms. Glassnode reported on Tuesday that the 90-day moving average of Bitcoin’s Realized Profit/Loss Ratio has fallen below 1. This technical milestone “confirm[s] a full transition into an excess loss-realization regime,” where losses being locked in by sellers consistently outweigh profits. Echoing Darkfost’s historical perspective, Glassnode notes that such conditions have historically persisted for at least six months before liquidity and bullish momentum return to the market.

Further evidence of extreme stress comes from analyst James Check. He observed that Bitcoin has nearly printed five consecutive red monthly candles “following the largest volatility spike of the cycle.” Key indicators are flashing warning signs: 1-week realized volatility spiked above 150%, “a level typically seen around capitulation events,” and the weekly Relative Strength Index (RSI) is at one of the “most oversold readings in Bitcoin’s history.” Check also highlighted a massive transfer of wealth, noting that approximately $70 billion worth of BTC has migrated to new hands within the $60,000 to $70,000 price range this year.

The scale of the downturn is quantified by analyst James Van Straten. He reported that Bitcoin supply in loss has just hit 10 million coins, marking the fourth-highest reading ever recorded. With the circulating supply reaching 20 million BTC next week, this means a staggering 50% of all Bitcoin in circulation is currently held at a loss. “History suggests that’s enough capital destruction for a bear market bottom,” Van Straten concluded, implying the market may be approaching a point of maximum financial pain.

Despite the overwhelmingly negative data, markets saw a minor rebound during early Asian trading on Wednesday, with Bitcoin adding $2,000 to briefly reclaim the $66,000 level. However, analysts caution that this move does not appear to be a natural, sustainable recovery. Bearish sentiment remains dominant, and the price action has formed another lower high on the charts.

This technical pattern is significant. The formation of successive lower highs indicates that selling pressure resumes at progressively lower price levels, a classic characteristic of a downtrend. For now, the $60,000 level is serving as a key support zone, but the market structure suggests it is merely a floor for establishing further lower lows. The path of least resistance remains downward until a decisive break above the pattern of lower highs occurs or until the historical capitulation signal—a break below the LTH cost basis—plays out, potentially setting the stage for a eventual recovery.