Bitcoin Builds a Bottom as Pain Is Passed to Stronger Hands

The Bitcoin price is at $62K and has shown a decline of 0.8% over the past 24 hours, but behind the scenes, on-chain analysts see an interesting pattern emerging. According to a new analysis from CryptoQuant, Bitcoin is building a more sustainable bottom, driven by what analysts describe as a “transfer of pain”: a gradual shift of loss-making positions from weaker to stronger hands.

Bitcoin is available at OKX and Bybit.

Short-term holders deep in the red

The charts of the adjusted Net Unrealized Profit/Loss (aNUPL) paint a clear picture of the current market situation. Short-term holders (STH) have been in negative territory for some time now: their aNUPL value continues to decline, indicating that a large group of recent buyers are sitting on significant unrealised losses. This is a classic signal often seen in the run-up to a potential capitulation.

Notably, the average aNUPL for the entire market shows an upward trend despite the ongoing price pressure. This suggests that stronger long-term holders are maintaining or even expanding their positions, while weaker hands are throwing in the towel. Recent data also shows that long-term holders now own 84% of the total supply, confirming that trend.

Redistribution as a foundation for recovery

Analyst MorenoDV states in the CryptoQuant analysis that an eventual capitulation or the gradual absorption of expensively purchased Bitcoin by stronger hands is necessary to form a solid bottom. According to him, this redistribution of supply is precisely what is happening now. The more of that “painful” supply transfers to parties with a longer time horizon, the more stable the foundation for a potential recovery becomes.

The second chart shows how the aSTH NUPL is sinking deeper into the red zone, while the trend line of the average aNUPL is pointing upward. Historically, this type of divergence is a hallmark of bottoming processes. Whether the market moves through this phase quickly or gradually is uncertain, but the on-chain signals at least point to a structural shift. Meanwhile, more institutional dollars are flowing back into Bitcoin: Bitcoin ETFs receive $197 million after eight weeks of outflows, further supporting the recovery narrative.