Analysis from Glassnode indicates that Bitcoin remains in a bear market capitulation phase, with current market performance reflecting an extended bottoming process rather than a trend reversal. Despite a weakening US dollar, the 10-year Treasury yield climbing to 4.7% continues to tighten financial conditions, with elevated real yields emerging as the core macroeconomic headwind suppressing prices. This assessment is reinforced by both macro divergence and on-chain valuation breakdowns, warranting caution against misinterpreting localized rebounds as a return to bull market territory.
Macro-level divergence is pronounced, with hard assets and Bitcoin exhibiting distinct risk profiles. Gold holds near $4,400, while crude oil trades in the mid-$80s, highlighting Bitcoin's absence from the broader bid on scarce assets. Its trading behavior remains that of a liquidity-sensitive risk asset rather than an inflation hedge. Although the US Dollar Index (DXY) has retreated from its July peak, Bitcoin prices remain anchored in the $60,000 to $65,000 range. This divergence underscores that elevated real and nominal yields raise the opportunity cost of holding non-yielding assets. A more favorable macro backdrop for Bitcoin requires not only a weaker dollar but also sustained declines in Treasury yields to ease restrictive financial conditions.
On-chain valuation models confirm the market has entered the capitulation phase. Since early February 2026, when prices fell below the true market mean of $75,800 and the short-term holder cost basis of $68,500, the structural trend has remained consistent. This breakdown establishes a bear market pattern, meaning Bitcoin trades below the cost basis of recent buyers and broader active investors. As the bear market deepens, the short-term holder cost basis has declined to $68,500, below the true market mean of $75,800, indicating current token turnover prices sit below the cost thresholds of both groups. This structure typifies the capitulation phase, where historical cycle bottoms have often incubated. As long as prices remain below the short-term holder cost basis, new buyers accumulate with high conviction, yet the market remains highly vulnerable to adverse macro shocks.
Data reveals this cycle features shallow drawdowns, broad distribution, and grinding bottom characteristics. Since mid-May, the market has been in the capitulation zone for nearly three months. The relative unrealized loss peak hovers near 0.25 (25%), far below the 0.6 (60%) levels seen in prior cycle capitulations. This indicates a shallower but more widely distributed drawdown. Portions of supply absorbed during the election period at prices well below historical highs have resulted in relatively even distribution of overhead supply, rather than concentration at cycle peaks. The realized profit/loss ratio stands at 0.75, still above the sub-0.5 levels that historically mark selling exhaustion. On a 90-day moving average basis, this metric must reclaim the critical 2.0 threshold to confirm a reversal. Significant declines in late January and May 2026, combined with over seven months of confirmed bear market operation, mean digesting dispersed overhead supply requires more time, directly contributing to the current sideways consolidation.
Derivatives and spot markets show clear divergence, with futures recovering while US demand remains absent. The 30-day perpetual market directional premium, which turned deeply negative during the recent selloff, has rebounded substantially into positive territory. This indicates leveraged traders are again willing to pay premiums for long exposure, reflecting a notable improvement in speculative risk appetite. However, compared to the extreme positive premiums seen in prior impulse rallies, current readings remain moderate, suggesting derivatives positioning has turned bullish but has not reached euphoric levels. Meanwhile, the Coinbase premium index remains persistently negative, below the zero line, indicating US spot demand has yet to form effective support. This creates a clear divergence between recovering leveraged risk appetite and subdued spot participation. Only when the Coinbase premium consistently returns to positive territory can stronger evidence emerge that the recovery is driven by genuine US spot accumulation.
Fund flow and volatility metrics show ETF stabilization alongside options positioning games. US spot ETF flows have improved substantially compared to the severe selling in June and early July, when the 7-day average slipped to approximately -5,000 BTC daily. Since then, inflows have repeatedly returned to positive territory, culminating in a strong accumulation wave in early August. The latest readings turned marginally positive after a brief outflow, indicating institutional selling pressure has largely subsided. On implied volatility, the DVOL index has retreated to the mid-30s, within the low range of the past two years, suggesting options markets price relatively subdued forward volatility expectations. The 25-delta skew remains positive, but one-week tenor skew has declined to the lower end of the recent range, while longer-dated tenors maintain levels near 10%–13%, reflecting easing short-term panic. Options premium trading is heavily concentrated around the $65,000 strike, with call buying concentrated at $68,000 and $130,000, while significant put buying at $45,000 indicates some investors continue positioning for deep downside protection. Positioning structure remains highly divergent.
In synthesis, the macro environment remains the primary constraint, with yield declines and selling exhaustion serving as key forward-looking indicators. Dollar weakness is offset by 10-year Treasury yields climbing toward 4.7%, while Bitcoin lags the buying momentum seen in gold and oil. On-chain models show prices below both the true market mean and short-term holder cost basis, confirming the capitulation phase. However, relative unrealized losses peaking near 0.25 indicate a shallower, more evenly distributed drawdown that requires time rather than deeper price declines to resolve. The realized profit/loss ratio of 0.75 confirms that selling exhaustion has not yet arrived. Until yields decline and this ratio reclaims the 2.0 threshold, any recovery should be viewed as a localized rebound within the bottoming process rather than a trend reversal.
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