Bitcoin (BTC) has seen notable volatility over the past few months, but on-chain data shows that the conditions for a bottoming process are in place. However, the confirmation signals that would mark a full recovery have not yet arrived.

Glassnode says the decline has entered its later stages, yet several metrics must align before a durable turn can be confirmed.

Bitcoin Bottoming Process Advances

In its latest report, Glassnode said Bitcoin continues to exhibit characteristics of a late-stage bear market across multiple on-chain indicators.

The firm noted that Bitcoin has traded below both the True Market Mean and the Short-Term Holder Cost Basis since early February 2026. Glassnode puts those levels at $76,600 and $72,200. The five-month discount ranks among the longest in Bitcoin’s history. 

“Prolonged accumulation at such a discount, where new capital is consistently deployed below the cost basis of both recent buyers and the broader active market, has conventionally served as the foundation for cyclical bottoms and represents an attractive zone for value-oriented investors,” the firm said.

Meanwhile, long-term holders drive the current selling. The share of total realized value attributable to long-term holder losses (30D-SMA) has risen to 43%, up from 15% in February.

Glassnode said capitulation among this cohort recently peaked at nearly $280 million per day, marking the highest level since December 2022, and it has not yet cooled.

Institutional demand remains soft. Spot Bitcoin exchange-traded fund (ETF) outflows eased to $88.9 million per day from a June peak, but flows stay negative.

At the same time, derivatives positioning has leaned cautiously. Although the put/call ratio has fallen to 0.56, its lowest level of 2026, skew, and volatility continue to reflect expectations of further downside risk.

“The market requires further cooling in capitulation pressure, stabilization in institutional flows, and ideally a sustained reclaim of the True Market Mean before the probability of a regime transition can be weighted constructively,” Glassnode noted.

Why July Could Look Better

Nonetheless, history offers the bulls some comfort. July has closed higher for Bitcoin in most years over the past decade.

Bitcoin gained about 20% in July 2018 and 17% in July 2022, both bear-market years, according to CryptoQuant.

Demand is also stabilizing. CryptoQuant data shows total demand recovered from a contraction near 650,000 BTC in early June toward neutral. US buyers have returned as well. The Coinbase Premium Index rose to -0.062 as Bitcoin bounced from $57,000.

However, CryptoQuant’s Bull Score Index sits at 20, far below the 60 reading it says a sustainable rally requires.

At the time of writing, Bitcoin traded near $62,904. Fresh US strikes on Iran pressured risk assets, erasing some of its gains from the $57,700 low.

Source: BeInCrypto