Nearly half of the Bitcoin supply sits underwater, yet accumulation lags, which is keeping the price trapped in a fragile consolidation range for now.
Bitcoin climbed back to $68,000 after several days of decline, as markets reacted positively to Donald Trump’s State of the Union remarks. The crypto asset added fresh 4% gains on Thursday.
But data shows that BTC is still trapped in a structurally defensive consolidation, as the price oscillates between the $60,000 and $69,000, which is being deemed as the main demand zone. In fact, Glassnode experts stated that the market is stabilizing but not yet recovering.
Key Market Conditions
At a 46% drawdown from the all-time high, Bitcoin sits at a depth historically associated with mid-to-late bear market phases, where time itself often becomes a risk factor rather than a catalyst for upside. Nearly 9.2 million BTC are currently held at a loss. This means that half of the circulating supply is underwater, a condition that aligns with prior late-stage bear environments. However, it does not, on its own, point to renewed strength.
Despite the scale of unrealized losses, accumulation behavior remains muted, as evidenced by an Accumulation Trend Score persistently below 0.5 since early February. This indicates a lack of conviction-driven buying, particularly among larger entities whose participation is typically required to form a durable bottom.
Liquidity conditions further validate this fragility. Glassnode found that the 90-day Realized Profit/Loss Ratio has slipped below the critical 1.0 threshold, which appears to be a transition into an excess loss regime where realized losses dominate profits – a state that can persist for months and is associated with impaired capital rotation and higher downside risk.
Market breadth continues to deteriorate as fewer assets sustain positions above long-term trend baselines. Meanwhile, off-chain data mirrors these on-chain signals. For instance, spot markets have flipped decisively into sell-side dominance since cumulative volume delta across major venues plunged to cycle lows, thereby indicating active distribution rather than passive liquidity gaps.
In derivatives markets, leverage has largely reset, as perpetual funding rates compressed back toward neutral. This not only reflected reduced speculative excess but also highlighted the absence of renewed bullish conviction. A similar defensive posture was echoed by the options markets.
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Additionally, dealer positioning suggested that while sharp moves can be mechanically amplified, the broader structure remains one of consolidation rather than directional resolution. As such, Bitcoin’s current regime is characterized by stabilization amid structural weakness, where neither sellers nor buyers have seized decisive control.
According to Glassnode, a durable upside recovery will require a clear reversal in these conditions – renewed spot absorption to counter active distribution, sustained accumulation from large entities to restore conviction, and a meaningful shift in institutional flows to reestablish a structural bid. Until such signals emerge, range-bound price action between established valuation anchors remains the dominant theme governing Bitcoin’s market structure.
Macro and Geopolitical Risks
In the near term, macro and liquidity factors may continue to dictate price behavior within this structurally defensive range. In a statement to CryptoPotato, Bitunix analysts said,
“If safe-haven flows strengthen the dollar, price could come under pressure and retest the 65–64K liquidity band below. Conversely, if capital rotates toward an anti-inflation narrative, short-term inflows could drive a sweep of overhead short liquidity near 69K. The core variable remains whether geopolitical risks escalate materially.”
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