Crypto
05 Feb 2026
Read 11 min
On-chain bitcoin bottom indicator shows how to spot lows *
On-chain bitcoin bottom indicator helps investors spot cycle lows early and time disciplined buys.
The on-chain bitcoin bottom indicator tracks the share of BTC held at a profit versus at a loss. When those lines meet, past cycles often found a low. Today, 11.1 million BTC sits in profit and 8.9 million in loss. A convergence near today’s cost basis could imply a ~$60,000 floor.
Investors love to hunt for bottoms, but the search can be harsh. One data point has helped again and again. It looks at how many coins are in profit and how many are in loss. When the two groups converge, fear tends to peak and price often sets a cycle low. Glassnode charts this dynamic in a clear way, and history shows why people watch it. It marked major lows in 2015, 2019, 2020, and 2022.
This view does not predict the date or the exact price. It does show stress building or easing across the market. As price crosses the average cost that holders paid, coins move between the profit and loss groups. That flip is visible on-chain and can signal capitulation or relief.
Supply in profit: Coins last moved at a lower price than today’s spot price.
Supply in loss: Coins last moved at a higher price than today’s spot price.
When spot price rises, more coins move into the profit bucket. When price falls, more coins slide into the loss bucket. This drift shows the crowd’s unrealized PnL in real time. Because the blockchain records coin movements, the measure does not rely on guesses or surveys.
The on-chain bitcoin bottom indicator becomes most useful near extremes. During deep drawdowns, the loss bucket swells. Long-time holders feel pain, and short-term buyers capitulate. When the loss share nears the profit share, the market is close to balanced pain. Sellers who must sell have often already sold. New buyers who scale in at that point tend to face less overhead supply.
Weak hands capitulate and sell to stronger hands.
Long-term holders start to add as value improves.
Volatility spikes but begins to fade after forced selling.
Narratives shift from panic to cautious accumulation.
This is why the signal is seen as a thermometer for market stress and a cross-check for timing any bottom strategy.
2015: Convergence just above $200 marked a long-term base after a brutal bear market.
January 2019: Near $3,300, the indicator aligned with a post-blowoff bottom.
March 2020: The COVID crash drove price under $3,000, and convergence flagged capitulation.
November 2022: Around $15,000 after the FTX collapse, the signal called another major low.
Track profit vs loss supply weekly on Glassnode or similar data providers.
Mark the zone where the two lines approach each other and start to overlap.
Scale entries, not all at once. Use a ladder to spread risk around the zone.
Watch realized price (the average cost basis) as a companion line in the sand.
Check derivatives funding and open interest for signs of forced liquidations.
Confirm with volume spikes on down days, then shrinking sell volume.
Use alerts so you do not chase panic candles in real time.
Keep cash in reserve in case the market overshoots below the zone.
Refer to the on-chain bitcoin bottom indicator as a map, not a precise GPS. It tells you the neighborhood, not the exact address.
Realized price: When spot trades near or below realized price, value improves.
MVRV (Market Value to Realized Value): Low MVRV shows undervaluation pressure.
SOPR (Spent Output Profit Ratio): A drop below 1.0 shows coins selling at a loss; a reclaim above 1.0 shows trend change.
Long-term holder supply: Rising long-term holdings during drawdowns is constructive.
Exchange balances: Falling balances can limit sell pressure.
Miner flows: Stress from miners can add supply; easing flows can reduce it.
Use dollar-cost averaging around the zone to smooth entries.
Set invalidation rules. If a key support breaks on high volume, reduce risk.
Size positions so a further 20% drop will not force you to sell.
Expect volatility spikes near bottoms. Wicks are normal.
Focus on time in market after the signal, not on catching the exact low.
Lag risk: On-chain data can update with a delay. Intraday moves may overshoot.
Structural change: New spot ETFs, macro shocks, or regulation can alter patterns.
False comfort: Convergence can persist before price lifts. Do not overleverage.
Narrow lens: The metric covers BTC. Do not assume it works the same for other assets.
Sample bias: Past cycles were fewer and smaller. Future cycles may behave differently.
Define your buy zone using profit-loss convergence and realized price.
Split entries into 4–6 tranches around that zone.
Wait for SOPR to flip back above 1.0 after a sell climax.
Watch funding rates turn neutral to negative, then normalize.
Seek a higher low on the daily chart with declining sell volume.
Raise stops only after structure improves and the 200-day average flattens.
The goal is not to be perfect. It is to be consistent and survive the chop until the trend shifts.
The market lives on cycles of fear and greed. The on-chain bitcoin bottom indicator captures that swing by tracking who is in pain and who is in profit. When those groups meet, history says downside energy is close to spent. Use the data, keep risk small, and let time work in your favor. If conditions rhyme with the past, convergence could again highlight a durable low—and give patient investors a clear plan.
How the on-chain bitcoin bottom indicator works
At its core, the metric splits circulating BTC into two buckets based on cost basis:Why convergence matters
Convergence is not magic. It reflects how many wallets are underwater versus ahead. When these groups are near equal, sellers have fewer easy profits to take, and buyers see value. This balance often appears near cycle lows because:What the data says now
Current Glassnode readings show about 11.1 million BTC in profit and 8.9 million BTC in loss. The spread is shrinking. If the two groups converged at today’s aggregate cost bases, it would point to a spot near $60,000. That level is not a guarantee. It is a guidepost built from what holders actually paid. This on-chain bitcoin bottom indicator also lines up with prior cycle washouts. In November 2022, after a major exchange collapsed, convergence appeared near $15,000. In March 2020, the COVID shock pushed price below $3,000, and the signal flashed again. In January 2019, around $3,300, and in 2015 near $200, the same dynamic showed up. Each time, the mix of fear, forced selling, and value buyers set the stage for a new cycle.Historical scorecard
How traders can use the signal
You can turn this metric into a simple plan. It works best as part of a toolkit, not alone.Confirm with other on-chain metrics
No single metric is perfect. Pair this signal with others to raise confidence.Risk management and timing
Bottoms are moments, but building a position is a process. Put guardrails in place.Limits and pitfalls to avoid
A simple playbook for the next potential bottom
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FAQ
Q: What is the on-chain bitcoin bottom indicator and what does it measure?
A: The on-chain bitcoin bottom indicator tracks the share of BTC held at a profit versus at a loss. It splits circulating BTC into profit and loss buckets based on holders’ last moved price using blockchain records, so the metric shows unrealized PnL without surveys.
Q: How has this metric behaved during past bitcoin market cycles?
A: Historically the indicator’s convergence between supply in profit and supply in loss has coincided with major market lows in 2015, January 2019, March 2020 and November 2022. Those convergence points aligned with bottoms near just above $200, about $3,300, under $3,000, and around $15,000 respectively.
Q: What are the current readings and what would a convergence imply today?
A: Current Glassnode readings for the on-chain bitcoin bottom indicator show about 11.1 million BTC in profit and 8.9 million in loss. If the two groups converged at today’s aggregate cost bases it would point to a spot near $60,000, though that is a guide rather than a guarantee.
Q: How can traders use the signal in a practical trading plan?
A: Traders should use it as part of a toolkit: track the convergence weekly on Glassnode, mark the buy zone where the profit and loss lines approach, and scale entries with laddered tranches. They should confirm with realized price, SOPR, funding rates and volume, keep cash reserves for overshoots and use alerts to avoid chasing panic candles.
Q: What are the main limitations and pitfalls of relying on this indicator?
A: The metric can lag intraday moves and structural changes like new ETFs or regulation can alter historical patterns. It covers only bitcoin, past cycles are a small sample and convergence can persist before price lifts, so do not overleverage.
Q: Why does convergence between profit and loss supply often signal a market bottom?
A: When the loss and profit shares near equality many weak hands have already sold and sellers have fewer easy profits to take, reducing overhead supply. Historically that balance appears near cycle lows because forced selling tops out, long-term holders add and narratives shift toward accumulation.
Q: Should investors use the on-chain bitcoin bottom indicator as their sole timing tool?
A: No, treat the on-chain bitcoin bottom indicator as a map, not a precise GPS, and avoid using it alone to time bottoms. Pair it with complementary metrics like realized price, MVRV and SOPR, size positions conservatively and set invalidation rules so a further 20% drop will not force you to sell.
Q: What confirmation signals should I look for after convergence appears?
A: Look for SOPR to reclaim above 1.0 after a sell climax, funding rates normalizing and shrinking sell volume with a higher low on the daily chart. Also check realized price, falling exchange balances, rising long-term holder supply and a flattening 200-day average before raising stops.
* The information provided on this website is based solely on my personal experience, research and technical knowledge. This content should not be construed as investment advice or a recommendation. Any investment decision must be made on the basis of your own independent judgement.
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