Economy

Bitcoin drops below key threshold amid bearish signals

17:50

By: Dakir Madiha

Bitcoin drops below key threshold amid bearish signals

Bitcoin has slipped beneath a critical technical level this week, fueling comparisons to the 2022 bear market as multiple on-chain metrics point to worsening market conditions and persistent selling pressure.

Blockchain analytics firm Glassnode reports that the cryptocurrency fell under the 0.75 quantile of the cost basis at around $95,000 and has failed to reclaim it. This shift means over 25% of the circulating supply is now held at a loss. "Risk has risen, with downside dominance unless this level recovers," Glassnode noted in a midweek post on X. The asset traded near $89,400 on Thursday, down roughly 30% from its October 2025 peak of about $126,200.

Adding to the gloom, Bitcoin's Sharpe ratio a vital measure of risk-adjusted performance has turned negative, per CryptoQuant data. A negative reading signals returns that fail to justify the asset's volatility, making it less appealing than low-risk options like Treasury bonds. History shows this metric stayed negative for extended stretches in past downturns, including seven months in 2022 when Bitcoin plunged from $47,000 to under $20,000. While current patterns evoke those times, analysts caution against direct parallels without factoring in broader macroeconomic shifts.

Holders have flipped from netting profits to realizing losses for the first time since October 2023, CryptoQuant figures reveal. Net losses over the past 30 days total about 69,000 BTC, while annual realized profits have shrunk to roughly 2.5 million BTC from 4.4 million in October 2025 echoing March 2022 levels.

Short-term holders face mounting strain. Glassnode data indicates Bitcoin's recent rally attempt stalled near $98,400 due to selling from 3-to-6-month holders with an average cost basis around $112,600. This group has ramped up sales during upswings, locking in losses and capping upside a hallmark of late bear market phases. Short-term holders have carried unrealized losses since November 2025; breaking even would require a push above $98,000.

Analysts remain split on 2022 parallels. Some, like researcher Garrett, argue the current macro landscape with cooling inflation and central bank liquidity injections differs sharply from four years ago's aggressive tightening. "Short-term trends may look similar, but long-term comparisons are absurd," he stated. Gold advocate Peter Schiff has piled on, noting precious metals hit record highs while Bitcoin has shed over 50% against gold since November 2021. CryptoQuant CEO Ki Young Ju predicts sideways action through Q1 2026, citing waning capital inflows as investors pivot to traditional markets.