Bitcoin’s decline began after the price cooled from a six-figure high to $80,000 to $70,000, driven by profit realization and weaker inflows. As sales grew, Bitcoin grew [BTC] approached the most important support in the chain. Since then, however, it has remained about 18% above the realized price of $55,000.
Historically, Bitcoin has traded 24-30% below this level during bear market washouts. That threshold has not yet been reached, which explains why complete capitulation has not yet taken place.
Source: CryptoQuant
As price pressures developed, the NUPL decreased towards the 0.20–0.30 zone. This decline occurred as unrealized gains declined. However, it remained above 0.0 or the negative levels seen at previous bottoms – a sign that panic loss distribution has not occurred.
At the same time the MVRV fell towards 2.0 as valuations cooled. This decline reflected the decline in earnings, but still remained well above the sub-10 capitulation band. As holders remained largely profitable, forced selling was limited, allowing BTC to stabilize and form a longer base before the recovery began.
Capital absorption weakens under Bitcoin’s increased price base
Capital expansion supported Bitcoin’s structural rally in 2023 and early 2024, while Realized Cap Impulse remained firmly above +2.0. During this period, the price rose from less than $30,000 to $70,000 and then to the $100,000 mark – a sign that profits were supported by real capital inflows.
ETF inflows and institutional allocations brought in billions as long-term holders absorbed the circulating supply. This balance indicated strong confidence and steady demand that could support higher valuations.
Source: Alpharactal
As the cycle matured in late 2025, momentum began to slow. The momentum spikes dropped from above +4.5 to +2.0 even as the price remained around $100,000.
This divergence revealed that new capital was coming in at a slower pace. Profit realization gradually replaced new accumulation, weakening demand absorption.
Source: Alpharactal
As the expansion cooled further, the momentum shrank towards 0.0 before turning negative in early 2026. This indicated a structural capital contraction. With supply still present, the price fell towards $85,000-$90,000, reflecting reduced demand strength.
However, the new acceleration now depends on renewed ETF inflows, long-term accumulation and expansion of macro liquidity. While a continued deterioration in inflows could prolong the corrective conditions.
Stress on the chain signals a mature cycle contraction
The compression of farming profitability determines the structural depth of the correction. At the time of writing, approximately 50% of the delivery remained profitable, showing that unrealized profits had declined and demand buffers had also weakened.
The STH-MVRV nearly 0.95 confirmed that recent buyers suffered losses, explaining the panic-driven selling. On the contrary, the stable LTH realized roof suggested that the long-term conviction was intact.
Spending behavior can therefore be seen as illustrative of this stress transfer. Realized losses rose as STHs sent >100,000 BTC to exchanges, marking a forced distribution. However, the rising accumulation trend scores hinted at the emergence of dip buying absorption.
Finally, currency flows usually determine liquidity conditions. Capitulation inflows occurred during dips, but episodic outflows indicated tighter supply. Meanwhile, ETF outflows and lower spot volumes reinforced a defensive consolidation regime ahead of renewed capital inflows.
Final thoughts
- Bitcoin’s correction indicated structural cooling, not capitulation, as weakening inflows and earnings compression eroded demand above realized support.
- An increase in short-term stress met emerging accumulation, leaving the recovery dependent on renewed capital and liquidity expansion.