Any BTC bought in 2025 would be at a loss if held until now. Therefore, as long as the 2025 chips decrease, except for wallet transfers, the rest are sell-offs at a loss. As of today, there are still 4.77 million BTC from 2025, down 41.5% from the peak in December last year. The slope of the downward trend clearly has two segments: a rapid decline before February, and a slowdown after February, but still maintaining a certain slope. This group is probably the largest supply side in the current market. Comparing data from 2024, 2023, and 2022, it’s not hard to see that these chips with unrealized gains have basically passed the steep phase of the decline slope. Moreover, the longer the time, the smaller the slope. From the chart, the slope of the curve after February almost became a straight line. Even if the price falls further, the change in the number of these chips is not obvious. In other words, those who needed to turnover have done so, and the rest remain inactive. From the past two bear markets, at the 2022 bear bottom, the high-position chips from 2021 dropped by 51%; at the 2018 bear bottom, the high-position chips from 2017 dropped by 62%; If we simply extrapolate, I personally think the bottom of this bear market will be at most 50-60% (currently 41%), not yet considering BTC bought by 2025 ETFs and MicroStrategy, most of which are locked and inactive.

There's a new indicator — the BTC Seller Exhaustion Index! It measures both low volatility and high losses; when both conditions are met, the indicator triggers a signal. Starting with the current situation: sellers have entered the "extreme exhaustion zone" (red area), which is the first time in this bear market cycle. Comparing with historical data, similar situations have appeared in every past bear market cycle; sometimes more than once (marked as 1/2 in the chart). When 1 appears, it may not be the absolute bottom of the bear market, but it is definitely within the bottom range. Subsequently, if the price fluctuates or stays lower but the index does not go lower, I mark that as 2; historically, 2 has a higher certainty than 1. However, the risk is that the price at 2 could be higher than at 1. From these observations, we can conclude: Those who have already built positions are not wrong; those who wait for 2 to appear before building positions are also not wrong; but if 2 appears and you still hesitate to buy, you risk missing the entire bull market. (ps: Don't say I always come up with new indicators, it's the glassnode team frequently updating them. I saw it, found it valuable as a reference, so I'm sharing it with everyone)

Chip concentration has risen to 14.8%! Half a foot has stepped into the "high-risk zone." Attention! The risk here does not refer to rising or falling, but to volatility. Chip concentration cannot predict direction, but based on historical data, my friends and I have found that there seems to be a pattern: When the curve starts to turn, if BTC's price was rising before this, then the probability of continuing to fluctuate upward is greater; conversely, the probability of continuing to fluctuate downward is greater (as shown in the chart); However, at this moment, the curve is still rising continuously. So, we cannot yet predict which direction has a higher probability next. But what is certain is that risk is accumulating, and volatility is brewing......

The current market debate about the BTC bottom is all reflected in this chart. I find it very representative and necessary to provide further explanation: This chart places every day since 2015 into a two-dimensional coordinate system. The horizontal axis is the Profit Share in Position (PSIP), measuring whether the market is cheap or expensive; the vertical axis is the 1-month realized volatility, measuring whether the market is intense or calm. The dashed lines divide the plane into four quadrants: cheap and volatile (top left), cheap and calm (bottom left), expensive and volatile (top right), expensive and calm (bottom right). The red diamonds represent the bottoms of the past three cycles. They all fall in the top left corner, meaning cheap and volatile. This is easy to understand: historical bottoms were all forced "surrenders," where prices instantly broke through the cost basis of many holders, and panic selling caused volatility to spike. The orange dot represents the current moment, located in the bottom left half. This indicates that this cycle has not experienced concentrated surrender; chips are changing hands in a low-volatility environment. Selling pressure is digested over time and indifferently, without violent breakdowns. My personal understanding is: Volatility contraction usually means the selling pressure is exhausted; those who wanted to sell have already done so, and the remaining holders are holding steady; PSIP at 55% means the price is hovering near the cost basis of nearly half the chips. Low volatility plus cost concentration is a typical redistribution and bottoming structure. This is a "boring bottom" pattern, not a "painful bottom" script. However, it must be said that volatility is mean-reverting. Long-term compression is often a precursor to a volatility explosion, though the direction of the breakout is uncertain. If a downward volatility release occurs later, the orange dot would instantly move to the top left, turning into a historically "standard bottom." It tells us: the current market structure looks completely different from all historical bottoms! Either this is the first boring bottom, or the real "surrender" has yet to come. Isn't this exactly where everyone's current disagreement lies? Some believe it is the former, others are waiting for the latter. Since we are no longer in the "top right" or "bottom right," and I don't want to bet on a one-sided move, splitting the risk evenly should be fine 😀

Awesome! It has really surpassed 1.15 million. Now, the single price of $63,000 has accumulated to 1.15 million BTC, which is an extremely rare phenomenon in history. Although the recent coldcard hardware wallet vulnerability has forced some long-term holders to transfer BTC. But it is definitely not the main reason for the explosive turnover of chips around 63k. Rather, it is the result of BTC price maintaining low volatility over a long period of accumulation. At the same time, the nearby chip concentration has risen to 13.5%. Chips cannot accumulate indefinitely; the long and short game has reached a critical point where there must be a winner. I am increasingly looking forward to what will happen next.....

It's indeed a bit strange! In the past two days, long-term holders (LTH) have suddenly moved a large amount of chips. For two consecutive days, over 65,000 BTC have been moved (excluding internal transfers within the same entity), causing a significant drop in LTH net holdings. As shown in Figure 2, LTH net holdings started to deviate from the previously continuous upward trend since May and have been "stagnant" until July. This is a very rare phenomenon in the past year. Nearly 14,000 BTC were transferred to exchanges. For example, Trump's publicly listed company transferred 2,628 BTC to the Crypto.com exchange, which is part of this. As for the rest of the net reduction in LTH holdings, where they went and for what purpose, we do not know. Could it be that they know something and chose to hedge early? Regarding possible macro risks, especially those affecting BTC, here are the ones I can think of: 1⃣ The possibility of a Federal Reserve interest rate hike. This time, the vote was split 9:3, the most dissenting votes since September 2016. 2⃣ Middle East conflicts and oil prices are the biggest variables for inflation and are upstream factors of point 1. 3⃣ The US stock market AI sector valuation is highly concentrated, and capital expenditures increasingly rely on debt and private credit financing. If revenue falls short of expectations and financing costs rise, it could trigger systemic deleveraging. 4⃣ The yen carry trade positions have once again piled up into a one-sided net short, crowded and close to historical extremes. Are there others? Friends are welcome to help me add more. Finally, the current sensitivity of BTC's own chip structure will also invisibly amplify the above potential risk points. -------------------------------- Of course, this does not mean it will definitely happen; it is just our speculation based on the abnormal behavior suddenly appearing in LTH. Where there is abnormality, there must be a reason. We should closely monitor LTH behavior changes recently. If large-scale distribution continues, it will inevitably put pressure on the market. If it is just a brief individual behavior, the impact will be limited.

After sharing the chip structure data yesterday, many friends privately asked me: Based on other data, is the probability of an upward fluctuation greater, or downward? To be honest, it's hard for me to answer this question completely free of subjective bias. In a tweet a few days ago, we also discussed that from the logic of "breakeven points acting as support/resistance in bull/bear cycles," the probability of a small-scale downward move is greater, including the case of a "false breakout upward followed by a downward move." But on a larger scale, the trend change process is slow but inevitable. Maybe, if we look back two years from now, many of the current guesses, struggles, and even worries will be unnecessary. Just like the black swan event in November 2022, the price drop accelerated panic selling and helped bring the bear market to a close. However, it might also be because I subjectively hope for a "final drop." That way, there would be a chance to lower the average cost and fill positions accordingly, so the above is hard to guarantee as an absolutely objective view. But I know that whether or not there is a "final drop," the current situation is most likely at or near the bottom, not at the peak or mid-slope. This is within my understanding. Here is a data example: As the market matures, the proportion of LTH (Long-Term Holders) in the total network supply has gradually increased. Once they collectively surrender, the dominance of outflows to exchanges will definitely be stronger than in earlier stages. Therefore, when the proportion of "LTH transferring to exchanges at realized losses" exceeds the previous cycle's high point, it often occurs near the relative bottom of the current cycle. Looking back at February, although the price was similar to now, the values were quite different. So, BTC in February was close in terms of price range but not in timing. After July, the situation changed. More and more bottom conditions from different dimensions should gradually appear. Let's wait and see......