Bitcoin Activity Plunges, Warning Signs Flash of Entering a 2.5-Year Prolonged Slump

▲ Bitcoin (BTC) decline, U.S. dollar (USD) / ChatGPT-generated image

A key indicator analyzing real trading activity in the Bitcoin (BTC) market has turned downward for the first time in years, signaling not a short-term rebound but the beginning of a painful long-term reset phase.

According to cryptocurrency media outlet CryptoPotato on February 18 (local time), Entity-Adjusted Liveliness—an on-chain metric that analyzes Bitcoin selling and holding behavior—has reversed to the downside, suggesting a structural shift in the market. Analyst Axel Adler Jr. noted that Bitcoin’s liveliness peaked at 0.02676 in December 2025 and has since declined, historically indicating the start of a new accumulation cycle lasting between 1.1 and 2.5 years. After Bitcoin surpassed $126,000 in October 2025 to reach an all-time high and subsequently fell about 45%, the shift in this metric shows that market dominance is moving from sellers back to holders.

The liveliness indicator tracks the ratio of coin days destroyed to coin days created, serving as a tool to gauge the behavior of long-term holders. Adler explained that because liveliness tends to lag behind price movements, the current reading confirms that the market has only just entered a prolonged adjustment phase. Bitwise Chief Investment Officer Matt Hougan assessed that the current downturn is more moderate than the sharp crashes of 2018 or 2022, analyzing that participation by major institutional investors such as BlackRock is providing a different form of downside support compared to the past.

Not only institutions but also retail investors appear to maintain strong buy-the-dip sentiment. Coinbase CEO Brian Armstrong stated that as of February, retail balances on the platform exceed December levels of last year, indicating steady accumulation despite the downturn. Even though the total cryptocurrency market capitalization has shrunk by roughly 49% from around $4.4 trillion, investors’ willingness to buy does not seem to have weakened.

In fact, Bitcoin-focused firm Strategy has taken advantage of the bearish market by purchasing an additional 2,486 BTC, continuing its aggressive accumulation strategy. The company invested approximately $168.4 million to strengthen its portfolio, demonstrating the confidence of large capital players in Bitcoin’s long-term value. As institutional demand continues to flow through spot ETFs, there is growing speculation that this cycle could unfold differently from traditional downturn patterns.

The Net Unrealized Profit/Loss (NUPL) indicator for long-term holders currently stands at 0.36, showing that the majority of investors remain in profit. Historically, true market bottoms have formed when even long-term holders capitulated into negative territory, suggesting that further patience may be required. The Bitcoin market now appears to be undergoing a gradual structural transformation as it monitors institutional demand and evolving on-chain indicators.

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