Key Takeaways
How Severe Was Bitcoin’s Last Drop?
Despite the sell-off, 90% of BTC supply remained profitable, showing limited panic or forced exits.
What caused the correction?
Over-indebtedness caused $132 million in short liquidations, but long-term holders remained calm, keeping BTC’s base stable.
Bitcoins [BTC] The latest sell-off seemed steep, but did not mirror the panics seen in the Luna or FTX crashes of 2022. The evidence points to a debt reset, not a crisis of confidence.
More than 90% of BTC supply is still profitable
Data from Glassnode showed that more than 90% of Bitcoin’s circulating supply remained profitable despite the recent decline. That difference indicated that most of the realized losses came from overexposed traders and top buyers, rather than long-term holders.
That’s a crucial distinction because it suggests that the correction was structural rather than emotional.
Source: Glassnode
No sign of 2022-style capitulation
During the collapse of Luna and FTX, the percentage of supply in profits fell below 65%, marking a panic-induced capitulation phase. Those were textbook capitulations – moments when everyone rushed for the exit.
This time the design was completely different.
The recent decline was not fueled by fear or by spotholders selling under pressure. Instead, the crisis stemmed from an excessive debt burden in the derivatives market, which eventually had to be eliminated.
As the market turned against overexposed traders, their forced liquidations set off a rapid, mechanical chain reaction – sharp and sudden, but not emotionally driven.
Source:
Leverage, not trust
CryptoQuant’s Short Liquidations data showed that approximately $132 million worth of shorts were liquidated near the $112,000 price zone. That cascade has wiped out over-indebted traders and dragged down prices, but it has also helped reset the market structure.
The short squeeze was a clear sign that the market was flushing out excess debt and laying a cleaner foundation for the next phase.
Source: CryptoQuant
Long-term Bitcoin holders remained calm
In previous capitulations, long-term portfolios sent BTC to exchanges – a classic panic signal.
This time, the long-term holder supply remained steady while the short-term holder supply rose, showing that newer traders were leading the selling.
That is a sign of increasing maturity in the market. Long-term investors didn’t budge, and that stability helps prevent a deeper collapse.
Source: CryptoQuant
Bitcoin’s valuation remains balanced
At the time of writing, Bitcoin’s MVRV Z-Score stood at 2.15, indicating that BTC was neither overvalued nor deeply undervalued.
Historically, values below 1.0 indicate major bottoms, while values above 6.0 mark euphoric highs.
Source: CoinGlass
Taken together, the data shows that this correction was a healthy reset. Leverage disappeared, conviction remained strong, and Bitcoin’s structure appears poised for the next accumulation cycle.