Bitcoin (BTC) and the wider cryptocurrency market continue their long-sustained decline amid institutional and retail panic. The asset’s price dominated the narratives, but more headwinds are mounting amid previously bullish on-chain metrics.
Market Capitulation Affects Trader Profits
New data shows a massive decline in Bitcoin supply, signaling panic trading from multiple fronts. CryptoQuant researchers wrote that the true metric is at its lowest point since 2022, a phase marked by industry collapses and the infamous FTX implosion.
At 11.3M BTC, the supply in product is now at a bottom discovery band heightened by huge outflows. Based on historical data, this point indicates an increased exodus of traders, especially among short-term holders. From the depths of the 2019 crypto winter to the Black Thursday Liquidity event and the post-FTX outflows, trader panic became dominant.
Experts have compared this capitulation to previous cycles, concluding that a possible seller exhaustion might be on the cards. Notably, this is a major positive amid the whole crypto market chaos.
When Bitcoin price and performance move this year, it is presumed that short-term holders are out, leaving bullish whales. These investors have a lower cost basis, justifying the seller exhaustion recorded this week.



 “…it signifies that those remaining in the market are largely long-term HODLers whose cost basis is lower, or buyers who are currently underwater but refusing to sell. While hitting the Bottom Discovery band does not guarantee an immediate V-shaped recovery, it historically signals that the downside risk is becoming increasingly exhausted relative to the upside potential.”
After the FTX saga, Bitcoin’s price saw significant gains in Q1 2023, driven by institutional inflows. Talks of spot BTC ETFs boosted traders back into profits and fueled speculation for the future. Gradually, the market regained momentum, and the top assets hit multiple all-time highs.
On the other hand, there are 8.2 million BTC at a loss, according to Glassnode data, rekindling debates about the extent of the bear cycle. The previous phase saw losses of 10.6 million, suggesting that slight falls might still be expected. The consensus is that hovering near this mark could lead to actual stability.
Meanwhile, Ark Invest’s Cathie Wood noted that Bitcoin is done with 85% crashes, citing the proven asset class argument. In an interview with CNBC’s Squawk Box, she added that a 50% decline in a bear cycle would be considered a real victory by the community.
