Glassnode: Is there still a bull market? What is the bottom of this round of downward momentum?

summary

• In early January, Bitcoin entered a phase of strong investor distribution, with the Accumulation Trend Score confirming continued seller pressure.

• Heightened volatility, weak demand and liquidity constraints have prevented meaningful accumulation from restarting, exacerbating downside risks.

• Panic-induced selling intensified, with STH-SOPR surging well below the breakeven level of 1, suggesting that recent buyers were scared and realizing losses.

• The custom SOPR-adjusted CDD indicator we developed shows that the intensity of the sell-off mirrors past sell-off events, particularly one in August 2024, when the market plunged to $49,000.

Sell-side pressure remains

Bitcoin's cyclical behavior is a product of accumulation and distribution phases, with capital rotating between investor groups over time. The Accumulation Trend Score tracks these changes, with values ​​close to 1 (dark purple) indicating heavy accumulation and values ​​close to 0 (yellow) indicating distribution.

The chart below shows how several accumulation cycles are followed by a distribution phase, which historically leads to weaker price action. The latest distribution phase began in January 2025, coinciding with Bitcoin’s sharp correction from $108,000 to $93,000.

The Accumulation Trend Score currently remains below 0.1, indicating persistent seller pressure.

The Accumulation Trend Score measures the relative change in total on-chain balances. However, it is often influenced by the behavior of larger entities and does not reveal where Bitcoin is being acquired. While it highlights overall accumulation or distribution trends, it lacks the granularity to pinpoint key cost basis levels.

For deeper insights, we can turn to the Cost Basis Distribution (CBD) heat map, which visually shows where supply concentration is forming across different price ranges, helping us identify potential support or resistance areas.

Market participants actively accumulated BTC during the pullback between mid-December and late February, especially in the price range of $95,000 to $98,000. This dip-buying behavior suggests that investors still firmly believe in the bull trend, interpreting the pullback as a temporary pause before further gains.

Starting in late February, confidence in accumulation began to deteriorate as liquidity conditions tightened. External risk factors, including the Bybit hack and escalating U.S. tariff tensions, heightened market uncertainty and the price of Bitcoin fell below $92,000. This level is critical as it reflects the market’s break below the cost basis of short-term holders.

Unlike the early stages, there has been no notable dip-buying reaction this time around, suggesting that sentiment has shifted towards risk aversion and capital preservation rather than continued accumulation.

The CBD heat map confirms that accumulation demand weakens as macro uncertainty increases, further suggesting that investor confidence is a key driver of accumulation behavior. The lack of dip buying at lower levels suggests that capital rotation is ongoing, which could lead to a longer consolidation or correction phase before the market can find a solid support base.

Demand momentum declines

We now use the CBD heat map and the Accumulation Trend Score to highlight the lack of substantial accumulation since the end of February. We can delve deeper into this behavior by analyzing the cost basis of two subgroups of Short Term Holders (STH):

• 1-week–1-month holders – Investors who purchased BTC in the past 7 to 30 days.

• 1-3 Month Holders – Investors who purchased BTC 1 to 3 months ago.

During periods of strong capital inflows, the cost basis of the 1-week-1-month cohort is typically higher than that of the 1-3-month cohort. This suggests that newer investors are buying BTC at a relative premium, reflecting bullish sentiment and positive momentum. However, in Q1 2025, this trend began to level off, marking early signs of weakening demand in the short term.

As Bitcoin price fell below $95,000, the model also confirmed a shift toward net capital outflows as the 1-week-1 month cost basis fell below the 1-3 month cost basis. This reversal suggests that macro uncertainty has spooked demand, reducing new inflows and arguably increasing the likelihood of further selling pressure and a prolonged correction.

The shift suggests new buyers are now reluctant to absorb seller pressure, reinforcing a shift from post-record euphoria to more cautious market conditions.

Assessing fear

As the market enters the post-ATH distribution phase, it becomes critical to assess the level of fear among the short-term holder community, especially those that have recently entered. Understanding the behavior of this community helps market observers identify moments of extreme seller exhaustion, which historically has provided opportunities for long-term investors.

A key metric for this analysis is the Short-Term Holder Spending Output Profit Ratio (STH-SOPR), which measures whether STH is making a profit (SOPR > 1) or a loss (SOPR < 1).

Since the price dropped below $95,000, the STH-SOPR’s 196-hour moving average has remained below 1, indicating that most short-term investors are realizing losses. In an extreme moment, as the price plummeted to $78,000, the STH-SOPR fell to 0.97, highlighting the severity of the sell-off.

This continued downward momentum makes new investors nervous, leading to widespread panic selling at a loss. This often precedes local seller exhaustion, and long-term investors may monitor this dynamic for potential opportunities to re-enter the market.

In addition to tracking loss realizations, another key metric for panic selling is the number of tokens destroyed by short-term holders (STH-CDD), which measures the economic weight of tokens spent by new investors by taking into account the number of tokens and how long they were held.

During sharp market declines, STH-CDD can surge as investors who are about to become long-term holders panic sell, destroying large numbers of tokens on the day. This suggests that short-term holders who previously experienced uncertainty have sold off, potentially adding to downward pressure.

Combining these two concepts, we can construct an indicator that adjusts STH-CDD by incorporating profit/loss realization intensity, using the following formula:

( SOPR_STH - 1) * CDD_STH

This indicator complements the STH-CDD by weighting the strength and direction of realized profits and losses, providing more precise panic selling signals.

As shown in the chart below, recent selling by top buyers reflects severe loss realization and moderate selling events. A similar pattern was seen in August 2024, when Bitcoin plunged to $49,000 amid market stress and macro uncertainty. The current structure suggests a similar selling phase.

Bear Market Compass

Since the selling pressure mainly comes from investors who recently bought tokens at relatively high prices, it becomes sensible to judge the depth that the current bear market may reach. To assess this, we will use various statistical intervals based on the cost basis of short-term holders as readings of psychological fair value extremes.

The chart below shows the statistical high and low range of price deviations derived from these cost basis models.

Currently, the lower bound of the model (where short-term holders are trapped) is between $71,300 and $91,900. Notably, this range coincides with the previously discussed liquidity gap between $70,000 and $88,000, suggesting that there is a strong chance of a temporary bottom forming in this area, at least in the short term.

Summarize

Bitcoin's market structure has entered a post-ATH distribution phase, with weak aggregate demand and sustained selling pressure from recent top buyers. The Accumulation Trend Score has remained around 0.1 since early January, while the CBD heat map shows that investors' buying-on-dip reaction is weakening.

Using the cost basis of short-term holders, we can see that market momentum and capital flows have turned negative, indicating that demand strength has declined and investor uncertainty is affecting sentiment and confidence.

Short-term holders are selling out of fear, as evidenced by the STH-SOPR continuing to trade below 1 and the STH-CDD surging. This localized selling event is also consistent with the market trading toward the lower statistical range, and investors may be experiencing a high degree of financial stress in the near term.