Bitcoin's Liquidity Under Scrutiny: Glassnode Warns of Potential Deeper Bear Market

Leading analytics firm Glassnode has issued a cautionary report highlighting a significant decline in long-term Bitcoin liquidity, a trend that could signal a more profound bear market if current conditions persist. The analysis, based on key on-chain metrics, sheds light on the behavior of both short-term and long-term holders amidst recent market volatility.

Short-Term Holders Face Mounting Losses

Glassnode's latest weekly report utilizes the "Realized Profit/Loss Ratio" to gauge market liquidity, observing the proportion of profits versus losses realized by Bitcoin investors. A particular focus on Short-Term Holders (STHs) – those who acquired their coins within the last 155 days – reveals a concerning trend. Since early October, the STH Realized Profit/Loss Ratio has plummeted to a mere 0.07, indicating that recent buyers are predominantly selling at a loss. This overwhelming loss dominance suggests a severe evaporation of liquidity, especially after substantial demand absorption earlier in 2025, where long-term holders increased their selling. If this depressed ratio continues, market conditions could soon resemble the prolonged weakness observed in Q1 2022.

Long-Term Holders Show Resilience, But a Critical Threshold Looms

While short-term sentiment points to capitulation, long-term liquidity, as measured by the Realized Profit/Loss Ratio for Long-Term Holders (LTHs) (those holding for over 155 days), has shown more resilience. Despite a noticeable decline in the 7-day exponential moving average of the LTH ratio following Bitcoin's recent price crash, its value currently stands at 408. This implies that, on average, LTHs are still realizing profits that are 408 times greater than their losses, indicating a healthier state compared to Q1 2022 and previous market bottoms. However, Glassnode emphasized a critical warning: should this ratio compress further towards 10x or lower, the cryptocurrency market faces an undeniable risk of transitioning into a much deeper bear cycle. At the time of writing, Bitcoin is trading around $90,600, experiencing a 1.3% dip over the past week, as market participants closely watch these crucial liquidity indicators for signs of future direction.