Bitcoin Enters Extended Capitulation Phase Not Seen Since FTX Collapse, Glassnode Data Reveals

Bitcoin’s Extended Cold Cycle Mirrors FTX-Era Lows

According to Glassnode, the leading onchain analytics platform, Bitcoin is currently navigating its most prolonged capitulation period since the November 2022 collapse of FTX. The firm’s Bitcoin Cycle Position Heatmap—a composite measurement tool integrating 45 separate price and behavioral metrics—has maintained a predominantly blue coloration throughout 2026, signaling persistent weakness in market sentiment and pricing dynamics.

The heatmap, developed by Glassnode co-founder Rafael Schultze-Kraft, distills complex onchain data into a visual representation of market phases within Bitcoin’s recurring cycles. After a period marked by euphoria in November 2021, the tool shifted to its bearish configuration for most of 2022, overlapping with FTX’s implosion and Bitcoin’s descent to approximately $15,600. In his latest assessment, Schultze-Kraft characterized the current environment as “late in the bear, but not yet the unanimous deep blue that previously marked a floor,” suggesting markets have not fully reached capitulation’s deepest point.

Investor Profitability and Behavioral Metrics Signal Strain

The heatmap places significant emphasis on measuring whether Bitcoin holders are positioned profitably or at a loss, segregating analysis between short-term traders and long-term accumulation positions. This profitability lens, combined with dormancy metrics tracking how long bitcoins remain unmoved onchain, reveals the aging investor base and their shifting behavior across different market cycles. Schultze-Kraft notes that certain indicators modify their typical signals over time, requiring more nuanced interpretation rather than mechanical threshold-based readings.

Despite the extended capitulation phase, Glassnode’s concurrent Market Pulse report highlighted unexpected strength in onchain engagement. Daily active address counts and entity-adjusted transaction volumes both exceeded their upper statistical ranges, pointing toward sustained network participation and economic activity. This divergence between macro sentiment indicators and micro-level transaction behavior suggests participants are active even amid pessimistic price cycle positioning.

Coldcard Breach Triggers Transaction Volatility

The resilience narrative faced a challenge following disclosure of a low-entropy vulnerability in Coldcard hardware wallets. Analytics platform CryptoQuant documented a sharp spike in single-bitcoin and sub-1-BTC onchain transactions in response, as concerned users likely moved funds from affected devices. The volume surge mirrored patterns last seen following FTX’s November 2022 bankruptcy, with daily transaction counts reaching approximately 39,600 BTC on July 31—nearly identical to the 39,900 daily figure recorded on November 16, 2022.

The Coldcard incident underscores the operational risks that persist even during onchain monitoring improvements. While Glassnode commended overall network resilience and increased throughput, localized security events can temporarily distort transaction patterns and user behavior, potentially masking true market health beneath reactive defensive moves.

Bitcoin’s extended capitulation signals a market not yet ready to definitively bottom, though underlying onchain infrastructure demonstrates continued vitality—a dynamic that historically precedes the next accumulation phase. For the wider ecosystem including altcoins and layer-2 solutions like those built on XRP corridors, Bitcoin’s eventual recovery often catalyzes broader asset re-evaluation and renewed capital deployment into alternative systems.

Source: Glassnode, via Cointelegraph. Not financial advice.