Looking at $BTC On-Chain Data: What Stage Is the Bear Market in?

One of the most reliable on-chain indicators for identifying Bitcoin market cycles is the “Relative Unrealized Loss” provided by Glassnode.

This indicator measures: the percentage of total BTC that is currently in loss (compared to the purchase price) relative to the total market capitalization. Black line: Bitcoin price Orange area: Unrealized loss ratio The higher the orange area → the more investors are trapped in losses → the closer the market psychology is to panic This is a very useful tool for determining which phase of the cycle the market is in. When Does the Market Truly Bottom Out? History shows that major bottoms often occur when: The orange area suddenly spikes above 0.5 Most of the market is in deep loss Market sentiment shifts to despair and capitulation Examples: Early 2019 Early 2023 At those times, most market participants were heavily in the red. No hope left, no expectation that “the price will rebound quickly.” It is precisely during this extreme pessimism that long-term capital begins to quietly accumulate. This is the capitulation phase – the prerequisite for a new growth cycle. Conversely: The Bull Market Excitement Phase During strong rallies: Prices rise rapidly The orange area narrows toward 0 Almost the entire market is in profit This occurs at: Late 2017 2021 2024–2025 When everyone is in profit, selling pressure from “trapped” investors is almost nonexistent. Sentiment is extremely optimistic, even overly euphoric. But this is also often when risks start to build. Where Are We Now? After reaching the peak in 2025, Bitcoin begins to correct. The orange area is increasing again – indicating: FOMO capital at the peak has started to realize losses The market enters a correction phase However, the key point is: 👉 The current unrealized loss ratio remains relatively low. This means: Most BTC in the market is still in profit And even in significant profit (for investors who bought in previous cycles) In other words, the market has not yet reached a state of “most are suffering” – a necessary condition for a true cycle bottom. Where Does the Actual Downward Pressure Come From? Currently, selling pressure mainly does not come from: Panicked stop-loss sellers But from: Profitable investors beginning to take profits Old money distributing to new money Since most of the market is still in profit, if the downtrend continues, the downward momentum will come from profit realization rather than a wave of “desperate selling.” This is a very important distinction. Conclusion: The Bear Market May Not Be Over Yet Based on the current on-chain structure: We have entered a correction phase But widespread capitulation conditions have not yet appeared The number of deeply loss-making investors is not large enough to form a cycle bottom This suggests: 📌 The path of the bear market may still be ongoing. To establish a truly sustainable bottom, the market usually needs to go through: Liquidity exhaustion Prolonged bearish psychology And most importantly: a majority of investors in deep loss Until that happens, any recoveries should still be viewed as corrections within a downtrend – not the start of a new bull cycle. In the crypto market, on-chain data does not tell you the exact day the bottom is formed. But it reveals something more important: Whether the market has suffered enough to end the cycle.