Bitcoin’s recovery isn’t here yet: here’s what still needs to change

Nearly half of Bitcoin’s supply is underwater, but accumulation is lagging, leaving the price trapped in a fragile consolidation margin for now.

Bitcoin climbed back to $68,000 after several days of decline as markets reacted positively to Donald Trump’s State of the Union remarks. The crypto asset added another 4% gain on Thursday.

But data shows that BTC is still trapped in a structurally defensive consolidation as its price fluctuates between $60,000 and $69,000, which is considered the key demand zone. Glassnode experts even stated that the market is stabilizing, but not yet recovering.

Key market conditions

Down 46% from all-time highs, Bitcoin is at a depth historically associated with mid-to-late bear market phases, where time itself often becomes a risk factor rather than a catalyst for upside potential. Nearly 9.2 million BTC are currently held at a loss. This means that half of the circulating supply is underwater, a condition consistent with previous late-stage bear environments. However, it does not in itself indicate renewed strength.

Despite the magnitude of unrealized losses, accumulation behavior remains moderate proven due to an accumulation trend score that has been consistently below 0.5 since the beginning of February. This indicates a lack of belief-based purchasing, especially among larger entities whose participation is typically required to form a sustainable bottom line.

Liquidity conditions further confirm this vulnerability. Glassnode found that the 90-day realized profit/loss ratio has fallen below the critical threshold of 1.0, which appears to be a transition to an excess loss regime in which realized losses dominate profits – a condition that can last for months and is associated with reduced capital turnover and higher downside risk.

Market breadth continues to deteriorate as fewer and fewer assets maintain positions above long-term trend bases. Meanwhile, off-chain data reflects these on-chain signals. For example, spot markets have shifted decisively to sell-side dominance since the cumulative volume delta on major trading venues fell to cycle lows, indicating active distribution rather than passive liquidity shortages.

Leverage has largely been reset in the derivatives markets as perpetual funding rates have returned to neutral. This not only reflected a reduced speculative surplus, but also highlighted the lack of renewed bullish conviction. A similar defensive stance was reflected in the options markets.

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Furthermore, the dealers’ positioning suggested that while sharp moves may be mechanically amplified, the broader structure remains one of consolidation rather than directional resolution. As such, Bitcoin’s current regime is characterized by stabilization amid structural weakness, with neither sellers nor buyers having taken decisive control.

According to Glassnode, a sustained upward recovery will require a clear reversal in these conditions – renewed spot absorption to counteract active distribution, continued accumulation from large entities to restore conviction, and a meaningful shift in institutional flows to restore a structural bid. Until such signals emerge, price action between established valuation anchors will remain the dominant theme governing Bitcoin’s market structure.

Macro and geopolitical risks

In the short term, macro and liquidity factors may continue to dictate price behavior within this structurally defensive range. In a statement to CryptoPotatoBitunix analysts said:

“If capital flows strengthen the dollar, the price could come under pressure and re-test the 65-64K liquidity margin. Conversely, if capital turns towards an anti-inflation narrative, near-term inflows could trigger a surge in overhead short liquidity near 69K. The key variable remains whether geopolitical risks materially escalate.”