Author: Gino Matos

Translated by: Deep Tide TechFlow

Abstract: ETF funds are retreating, but long-term holders are absorbing the sell-off, and the ownership of BTC is being redistributed. Glassnode data shows that 10.83 million BTC are currently underwater, but it is precisely under this pressure that experienced buyers begin to rebuild positions. For investors, the real question is not when the price will rebound, but whether this round of turnover can be completed under the pressure of continuous outflows from institutions.

Glassnode's latest Week Onchain report shows that around 10.83 million BTC are currently at a loss, while only 9.22 million remain profitable.

The amount of loss supply now accounts for about 54% of the total measured, while the profitable supply is 46%, indicating that underwater coins exceed profitable ones by approximately 1.61 million BTC.

Glassnode describes this as one of the sharpest declines in investor profitability since the beginning of this bull market, which represents a threshold with real psychological weight.

Crossing this threshold in the past often coincided with a real capitulation from new buyers, with such pressure leading to structural corrections.

Underwater holders are most likely to panic sell or exit close to breakeven when prices rebound, creating a layer of resistance above in the market.

However, if patient capital is willing to absorb these coins, they may also be transferred to more conviction-driven buyers, as Glassnode's data shows that such buyers have already begun to emerge.

Under this pressure, the picture of sellers has begun to change, with Glassnode stating that long-term holders have started to rebuild positions, marking a reversal from the ongoing distribution phase, with net positions changing back to positive territory.

This pace remains moderate, far from the buying surge seen during previous accumulation cycles, but the direction has shifted. The first signs of a bottom often appear here—experienced holders believe the correction is worth buying long before the price itself confirms any signals.

Glassnode's accumulation trend score has risen this week across multiple groups, with wallets holding less than 1 BTC and entities holding 100 to 1000 BTC showing the strongest readings.

Wallets in the 1000 to 10000 BTC range have also turned into net buyers. Bitcoin's latent buying interest is spreading across the entire ownership hierarchy, from the smallest wallets to medium-sized entities.

The US-traded spot Bitcoin ETF remains in a state of continuous net outflow, and even as on-chain confidence builds in the opposite direction, this selling pressure continues. The ETF narrative explains why prices remain weak, while the on-chain narrative explains who is absorbing the exit.

Order books on Coinbase and Binance both show a shift toward the buying side, with buyers increasing liquidity below spot prices. This buying interest appears very patient, which is why even as the bottom begins to form below, prices may still look weak.

Hyperliquid traders hold the highest levels of bullish preference tracked by Glassnode, using leveraged exposure to bet on a rebound before spot confidence is fully confirmed. The cash market is attempting to establish a bottom, while the derivatives market is trying to get ahead.

Options traders have begun to pay for protection: the 14-day put-call volume ratio has climbed above 1.0, marking the highest reading in a year. Implied volatility is also rising, and although it is recovering from depressed levels, Glassnode does not classify it as a panic reading.

The market carries enough fear to begin touching the bottom, although the fear required to confirm completion of capitulation may still be accumulating.

Overall, this pattern appears unusual for a bottoming process; Bitcoin may be finding a bottom through an unusual mechanism: ETF investors are selling, while stronger and more patient hands are actively absorbing the exits in real-time.

Glassnode defines this as an early, still-developing bottoming process, noting that the final capitulation-driven volatility spike is still possible.

The buying scale from long-term holders is also far behind the scale seen during previous accumulation waves, keeping the recovery of accumulation fragile.

Bitcoin may find a bottom before ETF fund inflows return, as long as outflows slow down enough to stop overwhelming on-chain accumulation while crowded bullish positions on Hyperliquid gradually close through price increases.

How This Will Develop

In a bull market scenario, ETF outflows continue but slow down, while long-term holders and a broader group of wallets continue to accumulate throughout the summer.

The buy-side dominated order book continues to absorb supplies from new underwater holders, while Hyperliquid's aggressive bullish positions are resolved through a real rebound.

Bitcoin's adjustment becomes a controlled migration, transferring from ETF sellers and short-term holders to patient on-chain capital, with the transfer phase becoming the bottom.

In a bear market scenario, crowded bullish positions on Hyperliquid are washed out, ETF outflows continue, and underwater holders capitulate at lower prices.

Implied volatility spikes to genuine panic levels as the correction deepens, and the accumulation from long-term holders slows. Bitcoin still eventually transfers to stronger hands, but only through a final capitulation event.

The next bottom for Bitcoin may begin with an unusual sequence: institutions exit, weaker holders capitulate, and stronger hands quietly absorb. The bottom begins with a replacement of supply ownership, far earlier than price manifests.

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