Bitcoin's On-Chain Signals Suggest December Bottom May Hold Strong, with Room for Further Gains

Recent on-chain analysis from Glassnode reveals compelling evidence that Bitcoin may have established a significant floor last November, despite volatile price swings that have defined recent months. The blockchain data provider highlighted a particularly revealing metric: the Profit Supply/Loss Supply ratio among short-term holders—those who’ve held coins for under 155 days.

The Indicator That Predicts Market Capitulation

When BTC touched the $80,000 level in late November, this critical ratio plummeted to just 0.013, a threshold historically associated with major market bottoms. This pattern has repeated across multiple cycles: in 2011, 2015, 2018, and 2022, whenever the market reached these extremes, a substantial recovery typically followed. At that turning point, short-term holders’ loss supply spiked to 2.45 million BTC—the most severe capitulation since the FTX implosion—while their profit supply dwindled to a mere 30,000 BTC.

The Recovery Trajectory and Current State

The rebound that followed proved significant. As we moved into early 2026, Bitcoin climbed toward $94,000, marking a recovery of over 7% from those lows. During this same period, the loss supply contracted to 1.9 million BTC, while profit supply expanded dramatically to 850,000 BTC, pushing the ratio to approximately 0.45. Current data shows BTC trading at $91.25K, with trading activity reflecting ongoing consolidation patterns.

Why This Matters for Future Price Action

According to Glassnode’s analysis, this ratio follows a clear progression: when it approaches and breaks through 1, Bitcoin typically enters a sustained bull phase. The true market peak, historically, arrives when the ratio reaches around 100—implying current levels remain far from exhaustion. The data architecture suggests there’s meaningful upside runway remaining before reaching euphoric terminal conditions.

Interestingly, traditional financial markets often experience similar cyclical patterns, much like the predictability observed in commodity futures markets—consider how lumber futures track seasonal demand cycles. Similarly, Bitcoin’s on-chain cycles reveal structured patterns that savvy investors have leveraged across market cycles.

The takeaway: current on-chain metrics indicate the worst capitulation may be behind us, with the market potentially in early-stage recovery mode rather than facing imminent reversal.