Bitcoin miner reserves decline to record lows, indicating the crypto market may be nearing its bottom.

Recently, the narrative surrounding Bitcoin’s price has predominantly focused on one key element: the ETFs.

Funds flow in, prices rise; funds flow out, prices fall. This storyline is straightforward and not inaccurate, yet it is incomplete, as Bitcoin encompasses more than just a price ticker. The network possesses its own internal mechanisms, and some of the most insightful indicators regarding our position in the cycle are readily available on-chain.

The charts I have been monitoring resemble checking a pulse beneath the headline. Miners, long-term holders, and the vast array of wallets do not respond in the same manner as ETFs; they do not change direction impulsively. Instead, they persist, hold, then break, and subsequently recover.

This is why I chose to examine several cycle indicators that have kept me grounded over the years: miner reserves, NUPL, and the percentage of UTXOs in profit.

Bitcoin miner reserves decline

We will begin with miners, as they represent the intersection of Bitcoin’s “real economy” and the fiat world. They have expenses to cover, are continuously converting electricity into BTC, and when the economics become unfavorable, they cannot afford to be philosophical; they sell, shut down, restructure, relocate, hedge, and strive to survive.

The data indicates that miner reserves are decreasing to levels not seen since the early days. Currently, miners hold approximately 1.801 million BTC.

Bitcoin miner reserves have steadily declined from their early-cycle peak, even as price trends higher over the long term, underscoring a structural drawdown in miner-held supply. (Source: CryptoQuant)

In the past 60 days, they have lost approximately 6,300 BTC, averaging just over 100 BTC per day. This steady decline is indicative of a business under strain, where the treasury becomes working capital.

Bitcoin miner reserves continue to trend lower through 2024–2026, even as price experiences sharp rallies and pullbacks, highlighting persistent balance sheet pressure across the mining sector. (Source: CryptoQuant)

In dollar terms, the situation appears even more severe. Miner reserves in USD are around $133 billion, reflecting a decline of just over 20 percent in approximately two months. This decrease is attributable to both price fluctuations and coins exiting miner wallets, and the combination of these factors is significant, as it narrows their margin of safety.

If BTC is declining while reserves are diminishing, miners possess less buffer to withstand volatility, and the market faces an additional potential supply source if conditions worsen.

Bitcoin miner reserves measured in USD have dropped sharply alongside recent price weakness, erasing a significant portion of the sector’s balance-sheet buffer despite remaining elevated by historical standards. (Source: CryptoQuant)

This is where the ETF narrative intersects with the on-chain narrative. The ETF market can be harsh and may overshadow other factors in the short term.

Examining recent flow data, the net movement over the last 10 trading days is approximately negative $1.7 billion, averaging around $170 million per day. This figure is significant enough to dominate marginal demand and is rapid enough to alter sentiment before most participants even notice the change.

However, the issue with focusing solely on flows is that it reveals surface-level activity, not the underlying developments.

Net unrealized profit and loss chart

If I aim to determine our position in the cycle, I need to ascertain whether the market is experiencing a typical downturn that could rebound or if it is nearing a more profound reset that necessitates a substantial washout.

This is why I monitor NUPL, net unrealized profit and loss. While it is not flawless, it effectively indicates when the market overall is in profit, in distress, or somewhere in between.

According to the latest data, NUPL remains positive at around 0.215, keeping Bitcoin in the favorable zone. It has significantly decreased over the past couple of months, dropping by about 0.17, and that decline is noteworthy, as it reflects a shift in sentiment.

Bitcoin’s Net Unrealized Profit/Loss (NUPL) remains positive but has compressed sharply, signaling declining aggregate profitability without a full capitulation into net losses. (Source: CryptoQuant)

The critical threshold for me is when NUPL falls below zero, particularly if it approaches negative 0.2.

NUPL last dipped below zero in early 2023, and the last instance it fell below negative 0.2 was in late 2022. This range is where genuine capitulation occurs, and where the argument for “bear bottom confirmation” has typically been strongest.

We are not at that point currently, which is significant if one is attempting to identify a bottom today. While it does not imply we cannot be nearing it, it indicates we lack the type of confirmation that usually accompanies a classic cycle low.

How many trades are in profit right now?

Next, we examine the UTXOs in profit chart, which is quietly intriguing as it illustrates how the market has evolved over time. During the lows of previous cycles, very few participants were in profit.

In 2011, the low was around 8 percent; in 2015, it was about 15 percent; and in 2018, it reached approximately 49 percent. The COVID crash in 2020 is an unusual outlier that I consider a separate event.

In 2023, the low was about 60 percent. Current data for 2026 shows a low around 58 percent, with the latest reading at approximately 71 percent.

This trend, with rising floor levels, tells a human story. Bitcoin has garnered more long-term conviction than in the past, with more holders possessing a low cost basis and more individuals who have endured enough cycles to understand the dynamics, which alters how deeply the pain can extend before the market identifies a buyer.

It also influences how quickly a bottom can form, as less profit needs to be wiped out to push a significant group into discomfort.

This leads to the primary question, which I believe should be central to this entire narrative.

If UTXOs in profit have already reached levels resembling previous bear lows, are we closer to the bottom than many anticipate, even though the cycle is “too early” according to the typical four-year timeline?

The share of Bitcoin UTXOs in profit remains elevated near historical highs, reflecting a structurally stronger holder base even as periodic drawdowns mark moments of market stress. (Source: CryptoQuant)

The market’s stress test is happening in public

If you have ever observed miners during a significant drawdown, you understand the atmosphere. It is less about charts and more about logistics. Machines do not concern themselves with your theories, your power contracts do not heed your timelines, and interest payments are indifferent to narratives.

When prices decline and the network continues to function, miners are the first group compelled to make difficult decisions.

This is why miner reserves reaching extreme lows, at least from a long-term perspective, is psychologically significant. It indicates that miners have been depleting their inventory over an extended period and serves as a reminder that the industry has matured into a sector that operates with real balance sheets.

If the reserve base is already diminished and profitability continues to be pressured, there may be instances where miner selling transitions from being discretionary to being compelled.

There are also indications in the broader mining data that stress is genuine.

Significant difficulty adjustments and hashrate declines typically occur when the economics are tight, and when disruptions, weather, or marginal operators create a sudden change in the network’s dynamics.

We have recently experienced one of the largest difficulty adjustments in history, linked to hashrate declines and operational disruptions, which aligns with the overarching theme of pressure building within the mining sector.

This is why I am cautious about viewing the current selloff as solely an ETF narrative. ETF flows are influential, and at present, they are trending negatively. However, miner and on-chain holder behavior are the factors that determine whether a dip remains a dip or evolves into something more significant.

I also believe it is important to contextualize the numbers, as scale is relevant. Miner reserves have decreased by approximately 6,300 BTC over 60 days. At current spot prices, that equates to hundreds of millions of dollars worth of net coins exiting miner wallets.

This figure seems substantial until compared to ETF flow regimes, where the market can witness net movements in the billions within a few weeks. The ETF market can absorb miner supply in a manner that retail previously struggled to achieve.

The more intriguing aspect is how these forces interact.

When ETF flows are negative and prices are declining, miners face pressure, and miner reserves continue to decrease.

This can create a feedback loop, as declining prices tighten mining margins, tighter margins increase the likelihood of treasury drawdown, and treasury drawdown introduces supply into already weak conditions. While this does not guarantee a crash, it raises the likelihood of one if the trend persists long enough.

Where NUPL and UTXOs in profit start to disagree, the story gets interesting

If all indicators aligned perfectly, there would be little to discuss. The significance of this moment lies in the mixed signals that compel deeper consideration.

NUPL remains positive, which serves as a restraint. It indicates that the market has not entered the widespread underwater distress that typically characterizes the deepest bear lows.

One could still argue that we are in a reset, and that the cycle remains intact, but the indicator has not crossed the threshold that historically signifies “capitulation confirmed.”

Conversely, UTXOs in profit present a different narrative, or at least a different timing perspective. We have already observed readings that align with the 2023 trough levels. This is early if one interprets the four-year cycle literally.

This suggests that the market has already absorbed a significant amount of damage, and if enough holders are nearing the point of “not feeling wealthy anymore,” it may not require much additional selling to shift sentiment into complete exhaustion.

This is where I believe journalists often overlook the human aspect.

A bottom is not merely a single candle. It is a social process where the last group of individuals who were confident in their stance finally cease monitoring the price.

It is when the market becomes indifferent to narratives because it is too fatigued to engage in debate. Indicators such as UTXOs in profit serve as a proxy for that fatigue, and the fact that the floor continues to rise from cycle to cycle essentially tells the story of a market that has developed resilience.

So, could the bottom be near? Yes, it is possible.

However, the “could” carries significant weight, which is why I remain mindful of the NUPL threshold, as it distinguishes between a sharp washout that resets the landscape and a slower decline that continues to penalize impatience.

Three potential paths forward, and what would confirm each

The first path is one that many may find unappealing: a choppy, frustrating range where ETF outflows decelerate, miners halt the current pace of reserve depletion, and NUPL stabilizes within the 0.15 to 0.30 range.

The market does not collapse, nor does it surge; it simply wears participants down.

This scenario allows the cycle to persist without providing the clear resolution that many desire.

The second path involves classic capitulation, with heavy ETF outflows continuing, prices slipping further, NUPL falling below zero, and miners increasing distribution due to economic pressures.

If NUPL approaches negative 0.2, it would align with the historical framework for deeper bear confirmation, likely accompanied by volatility that prompts many to declare they are finished with Bitcoin for good, just before a turnaround.

The third path represents the early bottom thesis, suggested by UTXOs in profit reaching prior cycle floor levels sooner than anticipated.

In this scenario, ETFs transition from outflows to a series of inflow days, NUPL remains positive and begins to rise again, and miner reserves cease to diminish. This would indicate that the market absorbed its pain quickly and found buyers before a complete psychological reset occurred.

The tension between these paths is where our focus should lie. Participants are attempting to explain price movements in real-time using a single metric, while the chain reveals that the system is more complex than that.

Macro serves as the backdrop, and it always re-emerges in the narrative

Another aspect I do not wish to overlook is macroeconomic factors, as they are the reason the ETF narrative exists in the first place.

When institutions are involved, they introduce their own rhythm, which is linked to interest rates, liquidity, and risk appetite.

The Fed’s forecasts and the market’s expectations regarding policy are significant, as they shape the environment in which large allocators decide on their exposure, the extent of it, and the timing.

This is also why I believe the most effective framing is not “ETFs versus on-chain.” ETFs are now part of the ecosystem and can dictate the pace in the short term.

On-chain data is where one seeks deeper cycle insights and identifies stress that could transform a routine downturn into a structural event.

If I were to summarize what the data indicates, it suggests that the market is closer to exhaustion than it appears if one only focuses on flows, yet we have not reached full capitulation confirmation.

Miners have been depleting reserves, the USD value of those reserves has significantly declined, NUPL is compressing but remains positive, and UTXOs in profit are already nearing levels that have marked previous bear lows.

This combination makes this moment noteworthy, as it implies that the cycle theory may still hold, while the timing could still surprise us.

The chain provides sufficient evidence to take the notion that “the bottom could be nearer than anticipated” seriously, while also offering enough caution to avoid premature declarations of victory.

We must view the market from the perspective of those who cannot pause the game: miners who continue operating machines, holders who weigh conviction against fear, and institutions that respond to policy signals and flow models. All of these groups exert influence on the price from different angles.

The next significant moment will arise when the pressure on-chain either breaks or releases, rather than following a headline about flows.

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