Stop-loss selling has increased rapidly in the bitcoin (BTC) market, with on-chain indicators falling to levels seen at past bear market lows. Analysis in the market says investors are entering a full-fledged capitulation phase, while some also see a potential bottom-buying opportunity for long-term investors.

CoinPost, a blockchain media outlet, reported on June 29 that CryptoQuant on-chain analyst Darkpost analysed bitcoin’s UTXO profit/loss count ratio (P/L Count Ratio) as having fallen to past bear market levels for the first time in this correction phase.

The indicator in focus is the P/L count ratio, which measures the ratio of UTXOs used to take profits to UTXOs used to lock in losses. A UTXO is an unspent bitcoin transaction output, which retains information such as acquisition time, purchase price and amount. That data is used to determine whether investors realised gains or sold while accepting losses.

A chart released by Darkpost showed the current P/L count ratio has fallen to levels seen at the bear market lows of 2019 and 2022. By contrast, periods when the ratio was high overlapped with the peaks of the 2017 and 2021 bull markets and with the uptrend phase of 2024 to 2025. That indicates the market has entered a phase where loss-taking selling is outweighing profit-taking.

Darkpost interpreted the trend as a capitulation signal among market participants. "The periods when this indicator fell to the current level matched phases when most investors gave up on the market and lost interest," he said. "This process does not end in a single day and requires some time," he added. "It is not a section where large-scale profit-taking appears, but rather a time when the market should be watched closely."

Market sentiment is also deteriorating. A rise in loss-locking sales means more investors are choosing to cash out rather than expect a short-term rebound. In particular, the fact that the indicator has fallen to past bear market levels for the first time in this correction is interpreted as a sign that the contraction in investor sentiment has deepened beyond a simple price adjustment.

Darkpost also presented past cases. He said periods when the same indicator signalled a bottom range led to meaningful buying opportunities for long-term investors. He stressed, however, that such a signal does not mean an immediate price rebound. It could take considerable time after a capitulation phase forms to confirm an actual bottom and for the market to stabilise.

The market is watching whether further stop-loss selling will lead to additional declines or spur buying by long-term investors. Based on the on-chain indicators alone, the bitcoin market is now closer to a loss-clearing phase than a profit-taking phase.

That is expected to make changes in investors’ profit-and-loss structure and the moves of long-term holders key indicators for gauging the market’s future direction, rather than short-term price volatility.