On-chain analysis is pointing to a familiar kind of late-cycle stress in Bitcoin: investors appear to be running out of profit and increasingly spending coins at a loss. According to a CryptoQuant analyst posting under the name Darkfost, the ratio of spent Bitcoin outputs that are in profit versus at a loss has dropped to the lowest level seen in this bear market cycle.
The signal is notable because it has historically aligned with bear-market bottoming phases—periods when long-term holders tend to find more favorable risk-reward conditions, even if the market still feels unstable for weeks.
Key takeaways
- CryptoQuant analyst Darkfost says the Bitcoin UTXO profit/loss spent-output ratio has hit the cycle’s lowest point.
- He describes the move as the first trigger of this kind since the correction began, indicating more widespread capitulation.
- The prior time the metric was this low was during the mid-2023 bear market, when Bitcoin traded around $26,000.
- Other on-chain observers agree price may be beyond the first breakdown, but warn the base-formation phase is still underway.
- Near-term uncertainty could rise alongside geopolitical developments, as BTC reacts to evolving risk conditions.
Bitcoin’s “spent at a loss” signal reaches a cycle low
Darkfost highlighted an on-chain pattern derived from Bitcoin unspent transaction outputs (UTXOs). In his view, the latest move reflects capitulation: more coins are being spent after being underwater than at a profit.
In a post on Saturday, Darkfost said the UTXO metric—specifically the ratio of the number of UTXOs spent in profit versus at a loss—has fallen to its lowest point in the current bear market cycle. He added that it is the first time the signal has triggered since the correction started.
“This signal… demonstrates that the number of UTXOs spent at a loss is reaching significant levels, reflecting the start of a broader capitulation,” Darkfost said, framing the development as an indicator that the market is entering a bottoming phase.
Darkfost also argued that historically, these windows have tended to be profitable for long-term investors, because they often coincide with a stage where the majority has “given up and loses interest.” At the same time, he cautioned that the transition is not instantaneous and should be understood on a long time horizon.
Why the signal matters: capitulation can take time
The key nuance in the on-chain research is timing. Even if the UTXO profit/loss ratio has reached a bear-market extreme, market behavior can remain unsettled afterward. Analyst DurdenBTC echoed that point, stating that the signal “caught every cycle low since 2016,” but warning it will “still feel terrible for weeks.”
DurdenBTC’s commentary suggested that investors should not interpret a capitulation trigger as a guarantee of immediate stabilization. Instead, it can be read as evidence that selling pressure is becoming more exhausted, while price still needs time to form a durable base.
That distinction is important for traders and investors because on-chain capitulation signals can cluster around major inflection points while price action still oscillates. The more useful takeaway is not a precise “bottom price,” but the broader shift in who is selling and at what cost basis—an environment that often changes the character of subsequent moves.
What else is changing on-chain: SOPR and exchange inflows
Darkfost later reiterated the theme in a separate update, saying long-term holders are starting to enter a capitulation phase. In that context, he pointed to the Spent Output Profit Ratio (SOPR) moving into negative territory for that cohort.
However, Darkfost also identified a driver behind the correction: he said the decline has been largely fueled by a rapid increase in BTC inflows to exchanges originating from short-term holders. That distinction matters because it implies the selling pressure may not be uniform across investor groups. Long-term holders can show capitulation patterns, while the immediate supply to exchanges may be more concentrated among those who entered closer to the recent trading range.
For market participants, the interplay between these factors—loss realization signals among longer-duration holders and exchange flows from shorter-duration holders—can help explain why on-chain “bottoming” indicators sometimes appear before volatility meaningfully subsides.
Is Bitcoin stabilizing? Analysts point to base formation, not instant recovery
While some indicators are improving, other on-chain commentary suggests the market is still working through the early stages of recovery. Swissblock said on Saturday that Bitcoin likely moved beyond the initial breakdown, but that the network is “still in the base formation phase.”
In the same general line of assessment, Swissblock described conditions as mixed: price is stabilizing, yet momentum remains deeply negative. The implication is that even with a capitulation trigger on the UTXO profit/loss ratio, traders should expect a process rather than a straight-line rebound.
The current narrative, therefore, looks like a transition from active distribution toward early stabilization—where the worst of forced selling may be passing, but market structure and momentum have not fully repaired.
External risks: geopolitical headlines may add volatility
Beyond on-chain data, near-term risk factors can still influence Bitcoin’s tape. The article notes potential uncertainty and selling pressure linked to resumed strikes by the US military on Iranian targets over the weekend.
Central Command reported that US fighter jets conducted strikes on 10 Iranian military targets across multiple locations in and near the Strait of Hormuz following an Iranian drone attack on a commercial ship. At the time of reporting, BTC traded around $59,800 early on Sunday morning before recovering the $60,100 level.
This matters because capitulation signals don’t eliminate macro and geopolitical volatility. In practice, the market can still test support levels even while on-chain metrics suggest profit exhaustion is progressing.
Going forward, readers should watch whether the capitulation signals deepen or fade—particularly the continued behavior of SOPR for long-term holders and whether exchange inflows from short-term holders remain elevated or normalize—while also tracking whether momentum indicators improve as geopolitical risk stabilizes.
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