As an analyst, I’m seeing some concerning signals for Bitcoin right now. The first few weeks of February are painting a pretty bleak picture – almost 43% of all Bitcoin currently in circulation is actually underwater, meaning those holders are currently at a loss. Plus, looking at its performance this quarter, we’re down almost 26%.
According to them, there is little prospect for recovery before April.
On-Chain Metrics Show Widespread Capitulation
A recent analysis by CryptoQuant’s GugaOnChain suggests a worrying trend for Bitcoin investors. Currently, over 42% of all Bitcoins in circulation are held by owners who have lost money on their investment. The Net Unrealized Profit/Loss (NUPL) indicator, a measure of overall profitability, has dropped to 21.30%, indicating strong fear in the market.
According to GugaOnChain, with support from XWIN Research, the current reading of 8 on the Fear and Greed Index is exceptionally rare. This level has only been seen during major market downturns, such as the bottom of the 2018 bear market, the COVID-19 crash in March 2020, and the failure of FTX in November 2022.
According to experts in behavioral finance, this situation shows investors tend to avoid losses and follow what everyone else is doing, leading them to sell off risky investments after experiencing declines.
The price has dropped 25.8% this quarter, and experts at GugaOnChain don’t expect it to recover until early 2026. This decline is supported by data from Bitcoin ETFs, which have seen $2.17 billion in outflows since the beginning of the month. These outflows have increased as the price fell, particularly around February 6th when it approached $60,000, suggesting institutions are selling off their holdings.
Price Action Reflects Volatility
Recent studies support these observations. For example, Santiment, a data analytics company, noted that funding rates on exchanges had become significantly negative, indicating most traders were betting on prices going down.
As an analyst, I’m seeing clear signs of market stress reflected in Bitcoin’s price. Looking at the data, BTC has dropped around 3% in the last week, 10% over the past two weeks, and a more significant 28% in the last month. To put that in perspective, it’s currently trading about 46% below its all-time high of over $126,000, which it reached back in October.
The recent downturn isn’t limited to Bitcoin. According to GugaOnChain’s research, the overall crypto market is shrinking, with mid- and small-sized altcoins declining by over 18% and the growth of the 20 largest cryptocurrencies falling by nearly 12.5%.
Despite falling prices, demand from long-term holders—those accumulating Bitcoin—remains robust, totaling 380,104 BTC over the past month. Additionally, miners seem to be keeping their Bitcoin instead of selling it, potentially benefiting from income generated by artificial intelligence.
Overall, GugaOnChain’s analysis suggests the market is currently driven by fear, with investors mainly focused on protecting their assets and cautiously buying only a few select opportunities. There’s a lack of widespread optimism, and a market recovery will likely depend on how well investors can bounce back from these conditions.
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2026-02-16 14:07