[Digital Today reporter Yoonseo Lee] Bitcoin has entered its longest capitulation phase since the collapse of FTX in 2022, an analysis showed.

Cointelegraph reported on Aug. 5, local time, that on-chain analytics firm Glassnode’s composite indicator for the Bitcoin price cycle pointed to capitulation throughout 2026.

The indicator is the 'Bitcoin Cycle Position Heatmap' created by Glassnode co-founder Rafael Schultze-Kraft (라파엘 슐체-크라프트). It bundles 45 indicators, including basic price metrics such as market capitalisation, to show the market’s overall cycle position. A higher share of blue on the heatmap signals capitulation, while more red indicates an overheated phase heading toward a cycle peak.

The key is the duration. After an overheated phase in November 2021, the Bitcoin market spent most of 2022 in capitulation. FTX collapsed in November that year, and Bitcoin then hit $15,600, the prior bear market bottom. Schultze-Kraft said of the latest reading, "The current market is in its longest cooling period since FTX," adding, "It is close to the late stage of the bear market, but it has not yet reached the deep-blue phase seen at past bottoms."

Investor profit-and-loss flows also account for a large share of the indicator’s components. It reflects profitability conditions separately for short-term and long-term holders. Schultze-Kraft noted that some indicators change in how they should be interpreted over time. He explained that dormancy measures the number of days Bitcoin remains unmoved until it is used in an on-chain transaction, and the figure can rise as the investor base becomes longer-term, meaning comparisons across cycles require caution.

On-chain activity itself has instead strengthened recently. Glassnode said in its latest report, "On-chain activity has clearly strengthened," and daily active addresses and entity-adjusted transfer volume rose above the statistical upper band. It also assessed that network participation and the volume of economic activity increased noticeably.

Small on-chain transactions have also surged after the recent exploitation of a low-entropy bug in Coldcard hardware wallets. Some investors reacted sensitively right after the incident, but outflows showed a stabilising trend. CryptoQuant data showed growth in transactions of 1 BTC or less at a level similar to the period right after the FTX collapse. On July 31, on-chain transaction volume of 1 BTC or less totalled 39,600 BTC, close to 39,900 BTC on Nov. 16, 2022.

The market is seeing prolonged cooling in cycle indicators alongside a recovery in network activity. As a result, investor profit-and-loss structures and on-chain transaction flows are expected to remain key indicators for judging whether a bottom is forming, rather than a simple price rebound. Glassnode’s current assessment also suggests the market may have entered the late stage of a bear market, but it places weight on the view that it is not yet at a stage where a clear bottom signal has been confirmed as in the past.

The #Bitcoin Cycle Position Heatmap Red when euphoric, blue during capitulation. Today it sits in its coldest stretch since FTX: late in the bear, but not yet the unanimous deep blue that previously marked a floor. Always look for confluence when aiming to call a bottom. pic.twitter.com/dEPzhB2HHB