Bitcoin Nears Bottom, but Final Capitulation Signal Remains Absent

Bitcoin may be approaching a bottoming phase, but the market still does not fit the pattern of a classic capitulation low, according to on-chain analyst Axel Adler Jr. Long-term holder supply is maturing, yet the final burst of selling pressure seen at past cycle bottoms has not appeared.

In a research report published June 22, Adler wrote that Bitcoin was moving sideways near $64,000 and that the market's central question is whether a bottom is taking shape.

Long-term holder realized supply is moving in a direction similar to past bottoming periods, he wrote. The metric measures the amount of Bitcoin that has moved into the long-term holder cohort. It currently stands at 12.17 million BTC after rising to as much as 12.42 million BTC earlier this month.

Even so, the figure remains below levels seen at prior bear-market bottoms. Long-term holder realized supply climbed to about 15 million BTC at the 2015 bottom, about 16 million BTC during the 2018-2019 bottom, and about 19.7 million BTC during the 2022-2023 bottom.

Adler said rising long-term holder supply is a positive sign, but a stronger bottom signal would require the metric to move above 15 million BTC.

By contrast, the selling-pressure indicator tied to final capitulation has yet to activate. The gauge turns on when the broader market enters negative territory on NUPL, or net unrealized profit and loss, and shows how aggressively investors are selling at a loss.

The indicator has gone 1,256 days without a signal, Adler wrote, marking the longest such stretch in Bitcoin's history. The last signal came on Jan. 13, 2023, during the late stage of the previous bear market.

Selling-pressure signals appeared repeatedly around the major bottoms of 2015, 2018-2019, 2020 and 2022, he wrote. In December 2018, the indicator jumped to about 32%, coinciding with a cycle bottoming phase.

Adler said the current market structure is moving closer to a bottom from a supply perspective, while final capitulation stress has yet to emerge.

For Bitcoin to confirm a true regime shift, long-term holder realized supply would need to rise above 15 million BTC, while the selling-pressure signal -- absent for more than three years -- would also need to return, according to Adler.

The market is being reshaped around long-term holders, but the absence of the sharp loss-driven selling and capitulation signals seen at past cycle bottoms suggests caution is needed before declaring a short-term bottom.