Bitcoin's Flow Metrics: Echoing the Four-Year Cycle

Bitcoin is locked in a deep bear market range, trading between $67,000 and $68,000-a 47% drop from its all-time high. This price depth mirrors historical mid-to-late cycle phases, where the market is testing the resolve of long-term holders. The key flow metric signaling this is the convergence of profit and loss supply. Currently, 11.1 million BTC are in profit versus 8.9 million in loss, a narrowing gap that has historically preceded definitive cycle bottoms.

This on-chain stress is amplified by the 30-day Net Unrealized Profit/Loss (NUPL) indicator, which sits at 0.33. This figure places the market squarely in the "anxiety zone," indicating widespread paper losses across the holder base. The metric's sharp decline-down 43% year-over-year-confirms a deep sentiment reset. When combined with the profit/loss supply convergence, it paints a picture of a market where the aggregate cost basis is nearing the current spot price, a classic setup for capitulation.

Historically, such a confluence has marked troughs. The current 11.1M profit vs. 8.9M loss split suggests a potential bottom near $60,000, aligning with signals seen in 2015, 2019, 2020, and 2022. The key difference now is the persistent outflow from the ETF ecosystem, which has drained $4.5 billion since the start of 2026. This institutional selling pressure means the path to convergence may be more volatile, but the flow metrics themselves are echoing the proven cycle pattern.

On-Chain Distribution and Liquidity

The flow of BTC through wallets reveals a market where selling pressure is contracting, a sign of mid-cycle maturity. Realized selling remains concentrated in the 1-to-5-year holder cohorts, but distribution from coins older than one year has slowed meaningfully over the past month. This indicates that the most active mid-cycle distributors are winding down, a pattern that historically precedes a stabilization. However, the lack of fresh selling from the oldest, most patient holders suggests a potential exhaustion of the supply chain.

This distribution slowdown is mirrored in the state of market liquidity, which is impaired. The decisive signal is the negative Spot CVD, which has turned decisively negative across major venues. This metric measures the flow of coins from exchanges to wallets, and its negative reading signals active distribution by large holders. At the same time, the Accumulation Trend Score sits below 0.5, indicating weak conviction and a lack of sustained buying from larger entities. This combination points to fragile liquidity, where price is increasingly sensitive to incremental order flow.

The structural weakness is confirmed by the 90-day Realized Profit/Loss Ratio, which has fallen below 1.0. This ratio compares the total profit realized to the total loss realized over the past 90 days. A level below 1.0 confirms an excess loss regime, meaning more coins are being sold at a loss than at a profit. This is a classic sign of structurally impaired liquidity, keeping downside risk elevated even within the current range.

Institutional Flows and the Path Ahead

The institutional narrative is a key divergence from the on-chain cycle pattern. Despite the deep price drawdown, the structural bid from U.S. spot Bitcoin ETFs is absent. The market has seen five straight weeks of net outflows of roughly $3.8B in February alone, confirming institutional demand is not providing a floor. This sustained selling pressure, led by BlackRock's IBIT, has drained the ecosystem and is a primary reason the path to on-chain convergence may be more volatile.

The critical watch metric for a cycle inflection is the 90-day Realized Profit/Loss Ratio. This ratio has fallen below 1.0, confirming an excess loss regime where more coins are being sold at a loss than at a profit. This is a classic sign of structurally impaired liquidity, keeping downside risk elevated. For the cycle to shift, this ratio must turn positive, signaling a return to profit-taking and healthier distribution.

The path forward hinges on a reversal in ETF flows. A sustained shift from outflows to inflows would be the clearest signal that the institutional narrative is changing and that a new accumulation phase is beginning. Until then, the persistent outflow confirms the cycle is continuing its mid-to-late bear market phase, with liquidity and sentiment remaining fragile.