Bitcoin's On-Chain Structure Suggests Shift Away from Bear Market

CryptoQuant analyst Crypto Dan has identified an encouraging trend in Bitcoin's on-chain structure. The percentage of transaction outputs held at a loss has dropped from nearly 60% to around 27%, according to his analysis. This decline is similar to previous transitions out of bearish market conditions, which may indicate that the current cycle is also moving away from a bear market.

However, the price still needs to defend its support level at $71,300 and absorb potential break-even selling near $79,800. These levels represent the active-supply cost-basis support and invested-capital resistance areas, respectively. The analysis by Crypto Dan suggests that Bitcoin has recovered enough to keep most of its holders profitable but not enough to absorb all the supply waiting to exit at a break-even point.

ETF withdrawals pose a challenge to the improving on-chain picture, with U.S. spot Bitcoin ETFs recording approximately $450 million in net withdrawals on September 15. The withdrawals coincided with the Federal Reserve raising interest rates by 25 basis points and the failure of the CLARITY Act to advance in the Senate.