Bitcoin has printed another set of on-chain “bear-market bottom” signals this month, with analysts pointing to a metric last seen near the bottom of the previous cycle in November 2022. The update centers on how much of the BTC supply is moving in profit versus loss—an approach often used to gauge whether sellers are being exhausted.
In a Friday analysis, crypto analyst Axel Adler Jr., a contributor to on-chain analytics platform CryptoQuant, said the Advanced Net UTXO Supply Ratio has returned to its earlier buy-trigger behavior for the first time in nearly four years. While the model’s signal is bullish in the short-term, Adler emphasized that it does not automatically confirm a macro bottom, and that key “supply in loss” conditions still need to evolve.
Key takeaways
- Advanced Net UTXO Supply Ratio has crossed back above its buy threshold after spending time in deeply negative territory, printing buy signals in late June and early July.
- The model’s last comparable “buy trigger” appeared in November 2022, widely viewed as a bottoming period for the prior bear market.
- Confirmation would require the ratio to hold above zero alongside rising price; a return to negative territory without price support would weaken the case.
- Analysts say seller exhaustion alone isn’t enough—demand must follow to turn bottoming signals into a durable recovery.
A profit-and-loss metric returns to “buy trigger” territory
Adler’s Friday post ties Bitcoin’s current positioning to the Advanced Net UTXO Supply Ratio, which tracks the proportion of Bitcoin held in UTXOs (unspent transaction outputs) that last moved in profit versus loss. According to Adler, the ratio dropped into deeply negative territory and then recovered above the model’s signal level during a rebound, causing the framework to issue buy calls across “several sessions” in late June and early July.
Crucially, Adler framed this as a notable similarity to the end stages of the prior bear cycle, writing that it is the first buy trigger since November 2022, when analysts previously identified a bottom. That makes this more than a random dip-and-rebound—at least within the parameters of the CryptoQuant model—because the prior buy signal occurred near a cyclical low.
Adler also stressed that UTXO-based supply ratio cues are typically observed “near cyclical lows,” not necessarily as proof that a full macro bottom has already been reached. In other words, the signal may indicate conditions approaching a turning point, but it still requires additional confirmation from price behavior and from how much BTC remains locked in loss.
Why the signal isn’t a full “bottom confirmed” yet
The core of Adler’s caution is that the Advanced Net UTXO Supply Ratio is only one leg of the bottoming picture. He pointed to a specific confirmation condition: the ratio should hold above zero while price rises. In contrast, he described a negative scenario where the ratio slips back into negative territory without supportive price action—an outcome that would suggest the market has not yet cleared enough selling pressure.
Adler further argued that one “missing piece” is the degree to which supply is still being held at a loss. He noted that current levels have not yet reached the extremes seen during earlier bear markets, implying that while selling pressure may be easing, it may not have fully run its course.
He also offered a timing-oriented expectation based on another on-chain measure: Adler forecast that the 90-day simple moving average (SMA) of supply in loss should reach the model’s bear-market reversal target within two months. Until that happens, Adler suggested it is more accurate to view capitulation as a process rather than a completed event.
Other analysts flag “exhaustion,” but demand is still required
Adler’s view aligns with a broader theme in on-chain analysis: many metrics can point to seller exhaustion, but recovery usually depends on whether demand renews strongly enough to absorb remaining supply.
Another CryptoQuant contributor, Darkfost, also discussed potential inflection signals this week through the UTXO Supply framework. In a Wednesday Quicktake post, Darkfost noted that because the metric depends on the profit and loss state of UTXOs, it can signal during either rapid sell-offs or rapid price increases. Still, he said that on cyclicality, it would not be inconsistent to think that the end of this bear market could be approaching.
Darkfost’s key message was that the UTXO supply dynamics do not guarantee an immediate reversal. As he put it, the signals “won’t stop BTC from going lower,” but the market now has “several signals pointing to seller exhaustion.” He then identified the next step as a renewal of demand, warning that this phase could take time.
This distinction matters for investors and traders because it helps set expectations: a buy-trigger on a profit-and-loss ratio can indicate improving conditions, but it does not remove volatility risk if price continues to undercut support or if demand fails to materialize.
What to watch as the market tests for a floor
The immediate question for Bitcoin bulls is whether the on-chain signals translate into sustained market support. Adler’s framework makes that practical: readers should watch whether the Advanced Net UTXO Supply Ratio can maintain itself above zero and whether that improvement coincides with rising price, rather than quickly reverting to negative territory.
Equally important is progress on the “supply in loss” condition. Adler’s expectation that the 90-day SMA of supply in loss could reach a reversal target within about two months suggests that the market may need additional time for losses to wash out more completely—meaning this cycle’s bottoming could remain uneven rather than instantaneous.
Finally, while some market narratives anticipate a bear-market bottom forming later in the year, earlier coverage cited in the discussion pointed to expectations that favor a bottom in Q3 or later. With on-chain exhaustion signals emerging now, the next phase hinges on whether demand can catch up—turning a sell-pressure easing into a durable recovery.
For now, the most actionable takeaway is to monitor whether the current “buy trigger” behavior can persist and whether supply held at a loss continues to trend toward reversal conditions—because that combination is what analysts say would strengthen the case that a true cyclical transition is underway.
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