Remember the first few months of 2022? Bitcoin kept grinding sideways around $40k-$45k while everyone argued whether we were in a new bull market or just taking the stairs down to hell. Fast forward to December 2025 and, well, the charts are starting to rhyme in a way that makes even seasoned traders sit up straight.
I’ve been watching Bitcoin since the 2013 days, and every time someone says “this time is different,” I reach for the on-chain data. Right now that data is screaming one thing loud and clear: the market structure looks disturbingly familiar.
The Ghost of Early 2022 Is Back
On-chain analytics teams have been unusually blunt this week. Their verdict? Bitcoin’s current behavior mirrors the painful consolidation phase we saw between January and March 2022 – right before the Terra/Luna collapse sent everything into freefall.
That period was defined by three things: rising unrealized losses, shrinking profit margins for long-term holders, and extreme sensitivity to macro triggers. Guess what? All three boxes are being ticked again right now.
More Than 25% of All Bitcoin Is Underwater
One of the most reliable ways to measure market pain is through cost-basis distribution models. Think of it as looking at what price the average coin was bought and comparing it to where we are today.
Right now Bitcoin is trading below the 0.75, 0.85, and even the 0.95 profitability quantiles. In plain English? More than a quarter of all circulating supply was acquired at higher prices than current levels. That hasn’t happened since… you guessed it, early 2022.
“This leaves the market in a fragile balance between top-buyer capitulation risk and seller-exhaustion bottom formation.”
That single sentence perfectly captures the knife-edge we’re walking. The buyers who FOMO’d in above $90k are hurting. Some will panic and sell. Others will dig in and wait. The outcome of that battle will probably decide whether we get a swift recovery or another ugly leg down.
7.1 Million BTC Now Sitting in the Red
The “Total Supply in Loss” metric just hit its highest level since September 2023. We’re talking about 7.1 million BTC on a 7-day average – roughly 36% of the entire circulating supply when you zoom out far enough.
Historically, when this metric climbs into the 5-7 million range during what’s supposed to be a bull market, it signals distribution. Coins are moving from strong hands to weaker ones, and paper losses are piling up.
- Early 2022 sideways grind → 5-7M BTC in loss
- May-June 2022 capitulation → spiked above 9M
- November 2022 FTX bottom → peaked at 9.2M
- December 2025 right now → back to 7.1M
See the pattern? We’re not at capitulation levels yet, but we’re definitely in the danger zone that preceded every major drawdown of the past four years.
Long-Term Holders Are Still Profitable – But Barely
Perhaps the most interesting piece of the puzzle is what the old whales are doing. The Long-Term Holder SOPR (Spent Output Profit Ratio) has crashed from above 4.0 in November to around 1.43 today.
Translation: the coins that have been sitting untouched for six months or longer are still being sold at a profit, but the margin is getting razor-thin. In early 2022 we watched this exact metric grind lower for weeks before eventually flipping below 1 – the official signal that even the diamond hands were bleeding.
We’re not there yet. The fact that LTH-SOPR remains above 1 is actually mildly bullish in the short term. It means the core HODLer base hasn’t broken. But the trend is ugly, and the buffer is shrinking fast.
Why This Time Might Actually Be Different
Before you smash the sell button, let’s talk about the elephant in the room: institutional adoption. In early 2022 spot Bitcoin ETFs didn’t exist. BlackRock, Fidelity, and Ark weren’t buying hundreds of millions worth of BTC every week. The Treasury market wasn’t pricing in rate cuts. Trump wasn’t promising a strategic Bitcoin reserve.
Those are massive fundamental differences. The demand side of the equation is structurally stronger than it was three years ago. That’s why many analysts believe we’re seeing a high-timeframe shakeout rather than the start of another macro bear market.
The Two Scenarios Playing Out Right Now
Broadly speaking, the market has two plausible paths from here:
- Bearish scenario (2022 repeat)
Weak-handed buyers capitulate → LTH-SOPR breaks below 1 → macro shock (recession fears, liquidity crunch) sends us back toward the Realized Price (~$68k) or lower. - Bullish scenario (mid-cycle shakeout)
Current supply in loss peaks → selling pressure exhausts → institutional dip-buying absorbs the overhead supply → we consolidate sideways-to-up into Q1 2026 before the next parabolic leg.
Honestly? I lean toward the second scenario, but I’ve been wrong before. What I do know is that volatility is about to spike either way.
What Should You Actually Do?
If you’re a long-term believer, these are exactly the moments that separate the tourists from the survivors. The investors who kept buying between January and May 2022 – when everyone was calling for $20k – ended up making life-changing returns when the ETFs launched.
My personal playbook right now:
- Keep dry powder ready for sub-$80k (it might not come, but you want to be prepared)
- Rebalance profit-taking aggressively above $100k if we get there
- Watch LTH-SOPR like a hawk – a sustained break below 1.0 would be my personal red line
- Remember that time in the market still beats timing the market over multi-year horizons
The truth is nobody knows whether this is the final flush before the real bull run or the beginning of something uglier. But the data is giving us clear warning signs that we’re in a historically dangerous part of the cycle.
Stay vigilant, manage risk like your portfolio depends on it (because it does), and maybe – just maybe – we’ll look back at December 2025 as the moment the smart money stacked for the second half of the greatest bull market crypto has ever seen.
Or we’ll get wrecked again. That’s Bitcoin for you.
