The recent Bitcoin price story has been told as if ETFs were the only main players.
Money comes in, prices go up, money goes out, prices go down. This is a pretty story, and it’s not wrong, but it’s incomplete because Bitcoin is more than just a ticker. Networks have their own internal plumbing, and some of the best clues about where we are in the cycle are visible on the chain.
The chart I’m looking at feels like checking my pulse under the heading. Miners, long-term holders, and many wallets don’t react like ETFs do, they don’t change direction on a whim, they shatter, hold, then crack, and then recover.
That’s why I decided to check out some cycle gauges that have kept me honest over the years: Miner Reserves, NUPL, and UTXO percentage of profits.
Bitcoin miners’ reserves are decreasing
Let’s start with the minor. Because miners are where the “real economy” of Bitcoin meets the fiat world. They have bills to pay, they are constantly converting electricity to BTC, and when the math stops working, they can’t get philosophical about it, sell, close, restructure, relocate, hedge, survive.
Data here shows that mine reserves have fallen to levels not seen since early times. Miners currently hold approximately 1.801 million BTC.
Over the past 60 days, they have leaked around 6,300 BTC, averaging just over 100 BTC per day. This is a steady leakage, the kind you see when business is under pressure and the Treasury is left with working capital.
In dollar terms, the situation becomes even more dramatic. Mine reserves in US dollars were approximately $133 billion, a decline of more than 20% in about two months. The combination is important because part of it is the price and part of it is the coins leaving the miner’s wallet, reducing the margin of safety.
If BTC is falling while reserves are dwindling, miners will have less of a cushion to ride out volatility, and the market will have one more potential source of supply if the situation worsens.
This is where the ETF narrative collides with the on-chain narrative. ETF tapes can be cruel and can overwhelm everything else in the short term.
Looking at recent flow data, net flows for most of the past 10 business days shown are approximately -$1.7 billion, averaging approximately $170 million per day. This number is important because it is large enough to dominate marginal demand and fast enough for most people to change their sentiments before they have even registered a shift.
But the problem with just looking at flow is that it tells you what’s happening at the surface, not what’s being built underneath.
Net unrealized profit and loss graph
If you want to know where you are in the cycle, you want to know whether the market is in a normal downturn where it can snap back, or if it’s approaching a deep reset that requires a full-blown washout.
That’s why I pay attention to NUPL and net unrealized gains and losses. It’s not perfect, and nothing is perfect, but it does a good job of showing whether the market as a whole is enjoying gains, suffering, or somewhere in between.
In the latest data, NUPL is still positive at around 0.215, keeping Bitcoin in the green zone. It has fallen sharply in recent months, dropping by about 0.17. The slope is what fascinates me. Because you can feel your mood change with that compression.
The dividing line for me is when NUPL goes below zero, especially towards -0.2.
The last time NUPL was below zero was in early 2023, and the last time it was below -0.2 was in late 2022. That is the area where true capitulation exists and is usually where the “bearish bottom confirmation” argument is strongest.
We’re not there right now, and that matters if we’re going to call a bottom today. That doesn’t mean we can’t get close to it, it just means we don’t yet have the kind of confirmation that typically accompanies a typical cycle low.
How many trades are currently profitable?
Next, we have the UTXO profit chart. This is quietly fascinating because it shows how the market has matured over time. At the bottom of the early cycles, very few people were making profits.
The bottom in 2011 was about 8%, in 2015 it was about 15%, and in 2018 it was about 49%. The COVID-19 crash of 2020 is a strange outlier, and I tend to treat it as an event in its own right.
The bottom in 2023 was about 60%. Current data already records a low of around 58 percent in 2026, with the latest measurements at around 71 percent.
Its patterns, rising floor levels, tell a human story. Bitcoin has more long-term conviction than before, more low-cost holders, and more people who have been through enough cycles to understand the game, which changes how deep the pain can go before the market finds a buyer.
It also changes the speed at which bottoms form because they don’t have to wipe out so much profit as to force a large cohort into an uncomfortable situation.
That’s where the main question comes from, and that’s the question I think this entire story should revolve around.
If profitable UTXOs have already reached levels that look like historical bearish lows, that would mean they are closer to the bottom than people think, even if the cycle is “too early” for a typical 4-year scenario.
Market stress tests are being conducted in public
If you’ve ever watched a miner during an actual drawdown, you’ll know the atmosphere. It’s not about charts, it’s about logistics. Machines don’t care about your papers, power contracts don’t care about your timelines, interest payments don’t care about stories.
As prices fall and the network continues to move, miners will be the first group to have to make difficult decisions.
That’s why it’s psychologically important, at least in the long run, to have extremely low mine reserves. This shows that miners have already been destocking for a long time and is a reminder that the industry has matured into something that functions more like a real sector with a substantial balance sheet.
If the reserve base has already been decimated and profitability continues to be squeezed, there could be a moment when miner sales become less discretionary and more forced.
There are also signs in broader mining data that the stress is real.
Significant difficulty adjustments and hashrate drops tend to occur when economic conditions are tight or when there is a sudden change in the rhythm of the network due to disruption, weather, or marginal carriers.
We just experienced the largest difficulty adjustment in history related to hashrate drops and operational disruptions, which fits into a broader theme of increased pressure in the mining sector.
This is why I’m wary of treating the current selloff as purely an ETF story. ETF flows are strong, but they’re heading in the wrong direction right now. However, the actions of miners and on-chain holders are part of determining whether the decline remains a decline or becomes a vestigial one.
I also think it’s worth putting the numbers in the same box, as the scale helps. The miner’s reserves decreased by approximately 6,300 BTC in 60 days. At a rough spot level, that’s hundreds of millions of dollars worth of pure coins coming out of miner wallets.
This sounds huge until you compare it to the flow regime of an ETF. In an ETF flow regime, the market sees net movements of billions of dollars in a matter of weeks. ETF tape could gobble up miners’ supply in a way that retailers have struggled with in the past.
What’s even more interesting is how these forces interact.
When ETF flows become negative and prices fall, miners are squeezed and their reserves decrease.
This can generate feedback. This is because falling prices tighten mining margins, shrinking margins increase the probability of treasury drawdowns, and treasury drawdowns add supply to an already weak situation. This does not guarantee a crash, but if the trend continues long enough, it increases the likelihood of a crash.
Things get better when the interests of NUPL and UTXO start to misalign
If all the indicators lined up neatly, there wouldn’t be much to write about. This moment is important because the signals are mixed in a way that forces thought.
NUPL remains positive. It’s restraint. This indicates that the market is not in the kind of widespread below-the-surface pain that typically defines the deepest bearish lows.
You can argue that we are still in a reset, and you can argue that the cycle is intact, but the indicators have not historically crossed the threshold that screams “confirmed capitulation.”
Profitable UTXOs are telling a different story, or at least a story with a different timing. Measurements have already been confirmed that match the 2023 bottom. If you take the four-year cycle literally, that’s fast.
This suggests that the market has already taken on a lot of damage upfront, and if enough holders are already close to the brink of not being rich anymore, it won’t take much selling to completely exhaust sentiment.
I think this is where journalists tend to overlook the human element.
The bottom is not a single candle. The social process in which the last group convinced that they are right finally stops checking prices is where the true bottom lives.
That’s when the market gets tired of arguing and doesn’t care about the story. Profit metrics like UTXO are showing that fatigue, and the fact that the floor keeps rising cycle after cycle is basically a story about a market that has developed scar tissue.
So could we be nearing the bottom? Yes, it’s possible.
But “possibility” does a lot of work. This is why I have the NUPL threshold in mind. It’s the difference between a sharp washout that resets your board and a slow grind that punishes your impatience.
Three paths to take and what supports each one
The first path is the one that most people hate, a choppy and frustrating range where ETF outflows slow, miners stop draining reserves at their current pace, and NUPL stabilizes in the 0.15 to 0.30 range.
Markets don’t collapse, they don’t tear apart, they just wear people out.
This is a scenario where the cycle is perpetuated without the clean catharsis that everyone desires.
The second path is classic capitulation, with ETF outflows still heavy, prices continuing to fall, NUPL falling below zero, and miners forced by economics to accelerate distributions.
If NUPL were to push towards -0.2, it would fit a historical scenario for deeper bearish confirmation, and it would probably be accompanied by the kind of volatility that would have everyone vowing to be done with Bitcoin for good right before a reversal.
The third path is the early bottom theory, which suggests that UTXO profits will reach previous cycle floor levels sooner than expected.
In that scenario, the ETF reverses from an outflow date to a series of inflow days, NUPL remains positive and begins to rise again, and the outflow of miner reserves stops. This means that the market may have quickly eased the pain and found buyers before a complete psychological reset.
We need to focus on the tensions between these paths. People are trying to explain prices in real time with one metric, but the chain shows that the system is more layered than that.
Macros are background and always sneak back into the plot
Another thing you don’t want to ignore are macros. The reason the ETF story exists in the first place is because it is macro.
When financial institutions are involved, their own rhythms emerge, and those rhythms are tied to interest rates, liquidity, and risk appetite.
Market expectations regarding the Fed’s outlook and policy are important. Because it shapes the environment in which large capital allocators decide whether, when and how much exposure they want.
This is also why I don’t think the best framing is “ETF vs. on-chain.” ETFs are now part of the ecosystem and can set the pace in the short term.
On-chain data is where we look for clues to deeper cycles, and where we look for stresses that can turn routine downturns into structural events.
To summarize, what the data shows is that if we look only at flows, the market is closer to depletion than it appears, but there is no confirmation of complete capitulation yet.
Miners are draining reserves, the USD value of reserves has plummeted, NUPL is shrinking but still positive, and profitable UTXOs are already toying with levels that marked previous bearish lows.
This combination makes this moment noteworthy. Because while cycle theory suggests that it’s still valid, timing can still surprise us.
This chain has given us enough evidence to take seriously the idea that the bottom may be closer than expected, and enough restraint to avoid declaring victory too soon.
We need to look at the market from the perspective of groups who cannot pause the game, miners who keep their machines running, holders who continue to weigh faith against fear, and institutions that follow policy signals and flow models. They are all pulling the same price from different directions.
The next big moment will not come after a headline about flow, but when the pressure on the chain breaks or is released.
(Tag translation) Bitcoin
