On-Chain Indicators Signal Bitcoin Seller Exhaustion and Market Stabilization in Early 2025

The Bitcoin market in early 2025 has exhibited a complex interplay of on-chain signals and structural dynamics, offering a nuanced view of seller exhaustion and tentative stabilization. While the asset remains confined within a fragile price range, key on-chain metrics suggest that the worst of the bearish momentum may be abating, even as macroeconomic headwinds persist. This analysis examines how on-chain data has emerged as an early warning system for structural recovery, highlighting critical thresholds and patterns that investors should monitor.

Seller Exhaustion and the True Market Mean

Bitcoin's price action in early 2025 has revolved around the concept of the True Market Mean, a cost-basis threshold that separates a mild bearish phase from a deeper bear market according to Glassnode. By late 2025, the price had stabilized near this level, indicating that sellers-particularly those with unrealized losses-were beginning to capitulate. Over 25% of Bitcoin's supply was underwater at this stage, a condition last observed in Q1 2022, when the market similarly hovered near a fragile equilibrium as per Glassnode data. This repetition of patterns suggests a cyclical exhaustion of sellers, as holders with deep losses either exit positions or hold through volatility.

Realized loss metrics further reinforce this narrative. A z-score analysis of realized losses peaked in November 2025 but normalized by December, signaling a reduction in the intensity of selling pressure. Concurrently, net realized profit/loss metrics showed a decline in loss-driven selling without a corresponding price rebound, a hallmark of capitulation phases according to Bitcoinist. These indicators collectively point to a market where sellers are running out of ammunition, even if buyers remain hesitant to commit.

Technical Breakouts and Structural Fragility

From a technical perspective, Bitcoin's break above a descending trendline that had capped price action since early October 2025 marked a structural improvement according to Yellow. This breakout, however, occurred amid declining liquidity and reduced capital inflows into U.S. Bitcoin ETFs, underscoring the fragility of the recovery as Glassnode reports. The asset's inability to reclaim the 0.75 quantile (~$95,000) or the Short-Term Holder Cost Basis at $101,500 further highlights the challenges of sustaining momentum according to Glassnode.

Price consolidation between $81,000 and $91,000 as of late 2025 reflects a defensive posture, with key support at $86,000 and resistance at $90,000 acting as critical psychological barriers according to Bitcoinist. A clean breakout above $90,000 could reignite bullish sentiment, while a breakdown below $86,000 risks reigniting bearish dynamics. This tight range underscores the market's dependence on new demand to drive the next cycle, as existing on-chain liquidity appears insufficient to fuel a sustained rally.

Macro Constraints and the Path to Recovery

Despite on-chain signs of stabilization, Bitcoin remains vulnerable to macroeconomic shocks. Elevated real yields and Federal Reserve balance sheet contraction have constrained demand growth, preventing valuation metrics like the MVRV 365-day SMA from expanding beyond the 1.8–2.2 range according to TradingView. This stagnation, while above bear-market levels, indicates a market that is neither collapsing nor convincingly trending higher.

For a full exit from bear season, four structural changes are required:
1. ETF inflows must stabilize, reversing the outflows observed in late 2025 according to CryptoSlate.
2. Demand growth must reclaim its long-term trend, driven by on-chain activity and institutional adoption.
3. Funding rates must recover, reflecting renewed risk-on sentiment in derivatives markets according to Glassnode.
4. Price must reclaim its 365-day moving average, a key technical benchmark for cyclical transitions according to CryptoSlate.

Until these conditions align, Bitcoin will likely remain in a consolidation phase, awaiting catalysts to break the current impasse.

Conclusion: On-Chain Signals as a Roadmap

The on-chain data from early 2025 paints a picture of a market in transition. Seller exhaustion, as evidenced by normalized realized loss metrics and a stabilization near the True Market Mean, suggests that the bearish phase is nearing its structural endpoint. However, the absence of strong macroeconomic tailwinds and the fragility of technical indicators mean that buyers must tread cautiously. Investors should monitor the four structural conditions outlined above, as their alignment will determine whether Bitcoin enters a new bull cycle or remains in a protracted consolidation phase.

For now, the on-chain signals act as both a warning and a guide: the market is stabilizing, but the path forward remains contingent on external forces.