The on-chain signal that often marks Bitcoin bear market bottoms

Bitcoin is hovering around major long-term support, and one specific on-chain signal that has marked every previous bear market bottom is getting close to flashing again. If it does, it could set up one of the strongest buying opportunities of this cycle for patient traders.

The on-chain signal traders are watching

The main signal to watch right now is the share of Bitcoin supply that is in profit versus the share that is in loss. This is an on-chain metric that looks at every coin on the network and compares its current price to the price when it last moved on-chain.

In simple terms:

• Supply in profit: Coins that were bought (or last moved) at a lower price than today.
• Supply in loss: Coins that were bought at a higher price than today.

Historically, this balance between profit and loss has been a powerful sentiment gauge. When almost everyone is in profit, euphoria is usually high and risk is elevated. When most holders are in loss, sentiment is washed out and long-term opportunity tends to be at its best.

How this signal marked past Bitcoin bottoms

In every major Bitcoin bear market so far, there has been a period where more supply was in loss than in profit. That flip has consistently lined up with generational buying zones:

• 2015 bear market: After the brutal downtrend from the 2013 peak, the share of coins in loss finally overtook those in profit. That period marked the end of the bear market and the start of the next multi-year uptrend.

• 2018–2019 crypto winter: The same thing happened after the blow-off top near $20,000. As price ground down toward $3,000, more holders were underwater than in profit. That window became one of the best accumulation zones in Bitcoin’s history.

• 2020 pandemic crash: The COVID crash briefly pushed a majority of coins into loss. That spike in pain was followed by a rapid recovery and the start of the bull run that took Bitcoin to new all-time highs.

• 2022 FTX collapse: When FTX imploded and price dumped into the mid-teens, more supply was again in loss than in profit. Sentiment was extremely bearish, but that period turned out to be the bottom of the 2022 bear market.

Each time, the pattern was similar: heavy losses, terrible sentiment, and most holders underwater. Once that capitulation phase passed, the market had largely flushed out weak hands and set the stage for the next cycle.

Where the signal stands right now

Zooming in on the current cycle, the supply in profit vs. loss lines are now converging around the 50% mark. That means roughly half of Bitcoin’s supply is in profit and half is in loss.

If price drops further and tips the balance so that more supply is in loss than in profit, the same historic signal would flash again. Based on past cycles, that would suggest:

• A large number of holders are underwater.
• Sentiment is likely to be very negative across social media and mainstream coverage.
• Much of the sell pressure may already have been exhausted.

That combination has repeatedly lined up with strong long-term entry points for investors willing to look beyond short-term volatility.

Why some traders are preparing a big long position

Because this signal has been so reliable in past cycles, some traders are already planning to go aggressively long if it triggers again. The idea is to enter a high-conviction position once:

• The majority of supply is in loss.
• Price trades in a historically important support zone.
• Sentiment is washed out and funding rates are not excessively bullish.

One strategy being discussed is to wait for this on-chain flip and then open a large leveraged long, aiming to ride the move from the bear market bottom into the next major bull market leg. For example, a trader might commit several million dollars of their own capital at 5x leverage, effectively deploying tens of millions in buying pressure at what they believe is a cycle low.

This is a high-risk, high-reward approach that only makes sense for experienced traders with strict risk management. But it highlights how seriously some market participants take this on-chain signal.

The role of the 200-week and 350-week moving averages

Alongside on-chain data, long-term moving averages are also in focus. Two levels in particular matter:

• 200-week moving average (200W MA): This has historically acted as a major support zone in deep corrections. Bitcoin is currently bouncing from around this level, which is not surprising given its importance.

• 350-week moving average (350W MA): In previous cycles, deeper bear market lows have sometimes dipped toward or slightly below this longer-term trend line.

Some traders expect the final bottom of this cycle to form somewhere between the 200W and 350W MAs. That’s the zone they’re watching for spot dollar-cost averaging and, potentially, for opening large leveraged longs if the on-chain profit/loss signal confirms.

Timing the cycle: the 4-year pattern and the 500-day rule

Many analysts still see Bitcoin following a rough 4-year cycle driven by the halving. In this framework:

• The cycle top tends to occur roughly 12–18 months after a halving.
• The cycle bottom often forms around 1.5–2 years after the previous top, and roughly 1–1.5 years after the halving.

Using that logic, the current cycle bottom window appears to be open but not necessarily complete. Some estimates point to a likely bottom forming in roughly the next 100 days, around September or October, if the 4-year pattern continues to hold.

There’s also a simple strategy that has historically worked well for long-term investors: buy 500 days before the halving and sell 500 days after. While not perfect, this rule of thumb has captured a large portion of previous bull markets and can be a useful framework for planning entries and exits.

Why some traders prefer Bitcoin over hot IPOs like SpaceX

While traders are watching Bitcoin’s on-chain signals, traditional markets are buzzing about high-profile IPOs such as SpaceX. Some investors are even selling Bitcoin to buy into these new listings.

However, there are a few reasons why many crypto-focused traders still see better risk–reward in BTC:

• Valuation concerns: At an expected trading price around $175, SpaceX could debut at a valuation north of $2 trillion. With only about $18 billion in annual revenue, that implies a very rich multiple compared with giants like Nvidia, which generates over $200 billion in revenue.

• Upside vs. market cap: If SpaceX starts near $2 trillion, doubling your money would require another $2 trillion in value, making it the most valuable company in the world. By comparison, Bitcoin’s market cap is roughly half that level, and its main competitor as a store of value is gold, with a market cap around $30 trillion. That leaves room for a potential 10–20x move over the very long term if Bitcoin continues to capture market share from gold.

For investors weighing where to put fresh capital, these valuation dynamics are a key part of the decision.

Short-term price action vs. long-term opportunity

In the short term, Bitcoin has already seen a bounce from the 200-week moving average. Some traders who shorted the move down from above $80,000 to around $60,000 have taken profits and are now waiting patiently for the next setup, whether that’s a retest of lower levels or a squeeze higher before another leg down.

Funding rates are not excessively high, and liquidity is scattered around key levels such as $60,000 and $65,000, without a single obvious magnet. That leaves room for both upside squeezes and downside flushes before a clear bottom is in.

From a bigger-picture perspective, though, the focus is on:

• The approaching flip where more supply is in loss than in profit.
• A potential final leg into the 200W–350W MA zone.
• The broader 4-year cycle timing pointing to a bottom window in the coming months.

For long-term investors, these conditions often matter more than whether Bitcoin trades a few thousand dollars higher or lower in the next week.

How traders are positioning for the next phase

Here’s how many market participants are thinking about the current environment:

• Spot investors are using this period to gradually dollar-cost average, especially on dips toward major weekly moving averages.

• On-chain focused traders are watching the profit/loss supply flip closely. If and when more supply moves into loss, they’ll treat it as a strong accumulation signal.

• Leverage traders are planning high-conviction long setups only if price reaches their preferred zone (often below $58,000) and the on-chain signal confirms. Until then, they may stay patient or trade shorter-term ranges.

If you’re feeling uneasy about recent volatility, you’re not alone. Many traders have noted that something feels off with Bitcoin’s behavior this cycle, especially compared to past bull runs. For more context on that, it’s worth reading this deep dive into what’s different with Bitcoin right now.

At the same time, crypto as a whole is in a period of rapid change, with new narratives, regulations, and institutional flows reshaping the landscape. If you want a broader view of what’s happening beyond just Bitcoin’s price, check out this overview of the big things moving the crypto market right now.

Final thoughts

The key Bitcoin signal to watch in the coming weeks and months is the balance between supply in profit and supply in loss. When that flips and more holders are underwater than in the green, history suggests we may be near a major bottom.

Combined with long-term moving averages and the 4-year cycle framework, this on-chain metric can help traders and investors separate noise from opportunity. Whether you’re a spot DCA buyer or a leveraged trader planning a big swing long, the next 100 days could be some of the most important of this cycle.