Supply of bitcoin holdings sitting in loss has exceeded holdings in profit. Still, long-term holders and some wallet groups are turning back to buying, showing early signals of bottom formation.

On July 2 local time, blockchain outlet CryptoSlate reported that on-chain analytics firm Glassnode said in a report that about 10.83 million bitcoin are currently in loss, while about 9.22 million bitcoin are in profit.

Loss-making supply accounted for about 54 percent of the measured total, while profit-making supply was just 46 percent. That means there are about 1.61 million more bitcoin in loss than in profit. Glassnode viewed this as one of the steepest deteriorations in investor profitability since the start of the current bull market. It noted there is precedent for actual capitulation led by new buyers once the market moves past this zone.

Net position change has also turned positive again. Accumulation is slower than in past accumulation phases, but it is important that the direction itself has shifted, it said. Glassnode assessed that a first signal of a bottom can appear ahead of price when experienced holders judge a decline as a zone worth buying.

Actual accumulation strength has risen across multiple wallet cohorts. The accumulation trend score was strongest in wallets holding less than 1 bitcoin and in entities holding 100 to 1,000 bitcoin. The 1,000 to 10,000 bitcoin cohort also shifted to net buying. That indicates buy orders are spreading broadly from small wallets to mid-sized holders.

By contrast, U.S.-traded spot bitcoin exchange-traded funds have continued to see net outflows. Glassnode said ETF flows help explain the backdrop of weak prices, while on-chain data show who is absorbing the supply.

A temperature gap between the spot and derivatives markets was also evident. Order books on Coinbase and Binance shifted toward building liquidity with resting buy supply below the spot price. Prices still look weak, but it suggests demand is forming at the lower end to support a bottom.

In derivatives markets, long bias among Hyperliquid traders rose to the highest level in Glassnode’s tally. That means traders are using leverage to bet on a rebound before full conviction in spot is confirmed. It suggests derivatives markets are trying to price in a rebound ahead of spot while the spot market consolidates a bottom.

In the options market, the put-to-call volume ratio as of 14 days exceeded 1.0, hitting the highest level in a year. Implied volatility is also rising from low levels, but it is not yet enough to label the situation a fear phase, it said.

Key points to watch are the pace of ETF outflows and whether long-term holders keep accumulating. If ETF outflows slow and accumulation by long-term holders and various wallet groups continues through the summer, a bottoming phase could form as selling by newly loss-making holders gradually shifts to stronger hands. If Hyperliquid’s crowded long positions are liquidated and ETF outflows persist, there remains the possibility of another round of additional capitulation by loss-making holders.

Glassnode defined the current move as an early bottoming process that is still under way. It said buying by long-term holders remains limited compared with past large-scale accumulation phases, leaving any recovery fragile. Ultimately, the bitcoin bottom is increasingly likely to be determined by an unusual sequence of institutional investors exiting, weak hands capitulating and strong hands absorbing.