Bitcoin’s on-chain data is showing signs of improvement after months of pressure, reducing concerns that the cryptocurrency is slipping back into a full bear cycle. CryptoQuant contributor Crypto Dan says the share of Bitcoin transaction outputs declined from nearly 60% to roughly 27%. Still, price levels and weakening ETF flows could determine whether the recovery develops into a more durable trend.
On-chain pressure eases
Crypto Dan argues that the sharp decline in loss-bearing outputs shows widespread unrealized pressure across the Bitcoin network has eased considerably. Similar drops have appeared during previous transitions away from bearish market conditions, although Bitcoin’s limited number of completed cycles makes historical comparisons far from conclusive.
Price recovery itself also helps improve the metric. As Bitcoin rises, UTXOs that previously sat at a loss automatically move into profit, meaning the decline does not necessarily prove that fresh demand is entering the market. Another CryptoQuant contributor, Darkfost, identifies the active-supply cost basis near $71,300 as an important support level. Bitcoin traded around $76,400 on September 17, placing it above that threshold but below another major test.
Resistance tests recovery
Invested-capital cost basis around $79,800 represents the next key resistance level, where holders reaching break-even could create additional selling pressure. Sustaining a move above that level would suggest demand is strong enough to absorb available supply, while dropping below $71,300 could push more active coins back into losses.
ETF flows remain a potential concern. U.S. spot Bitcoin ETFs saw roughly $450 million in net outflows on September 15, the largest daily withdrawal since June. Another roughly $296 million left the funds on September 16, extending the run of withdrawals.
Fresh investment may therefore be needed to confirm that improving holder metrics reflect sustained demand rather than a temporary price recovery. Continued ETF withdrawals, a sustained Bitcoin move below the active-supply cost basis and another sharp rise in loss-bearing outputs would strengthen the bearish case. Crypto Dan’s data, however, currently suggests that the market has moved away from the widespread unrealized losses seen earlier in the downturn.
