In early 2026, Bitcoin finds itself in a precarious position, echoing past downturns from 2018 and 2022. Data analytics firm Glassnode reports a pivotal shift in investor behavior, with the “Realized Profit/Loss Ratio” dipping below 1. This suggests a predominance of investors now selling at a loss, pointing to decreasing liquidity and heightened capitulation risks. Since its zenith in October 2025, Bitcoin has seen its value slashed by half due to unfavorable macroeconomic factors and ominous technical indicators known as “death crosses.”
Is the Market In a Vicious Cycle?
Glassnode’s insights reveal a troubling pattern where Bitcoin investors are entrenched in a cycle of loss realization. The fall of the 90-day moving average for realized profits to below 1 underscores waning investor confidence. Historically, such conditions last about six months, with recovery dependent on resuming financial inflows.
Big-money investors, or “whales,” aren’t immune to this downturn. CryptoQuant data indicates their profitability has reverted to levels resembling the 2022 slump. This scenario hints at Bitcoin nearing its market bottom. Attempts to reach the $96,000 level in January were met with a steep fall to $63,200, stirring fears among institutional investors as well.
Signs of liquidity issues surfaced as daily profits dropped sharply from over $1 billion in December 2025 to a mere $183 million, further inciting panic. Rather than stabilizing their portfolios, investors chose mass liquidation, as evidenced by blockchain records exhibiting substantial capital flight.
What Are the External Factors Pressuring Bitcoin?
Factors beyond market mechanics, such as global political issues, are exacerbating Bitcoin’s troubles. Former U.S. President Donald Trump’s announcements regarding increased tariffs have suppressed risk-taking, leading many to flee from volatile investments like cryptocurrencies. Consequently, Bitcoin’s value plummeted 29% in a single month, with the broader crypto market adopting a defensive posture.
Technically, concern is growing around a potential “death cross,” where a short-term moving average dips below a long-term one—a historical harbinger of severe downturns. Past instances in 2014, 2018, and 2022 showed subsequent 30% to 50% additional declines. If confirmed soon, Bitcoin could face a further downturn.
Yet, some experts glimpse a silver lining. Bitwise CIO, Matt Hougan, describes this turbulence as part of Bitcoin’s “adolescence,” a potentially integral phase for maturation within institutional realms. Although recovery depends on macroeconomic improvements and key metrics rising above critical thresholds, present long-term trends remain intact.
“These cycles of turbulence represent necessary adjustments as Bitcoin matures, setting the stage for more sustainable growth,” claimed Matt Hougan.
While uncertainty over Bitcoin’s path continues, current signals demonstrate historical parallels combined with new challenges, compelling stakeholders to ready themselves for potential further fluctuations in the market.
