Bitcoin holders have seen a significant improvement in their overall position, with on-chain data showing that a growing share of BTC supply is now back in profit.
However, analysts are warning investors not to assume the cryptocurrency has officially entered a new bull market.
According to blockchain analytics firm CryptoQuant, Bitcoin’s recovery indicators are improving, but several important signals still suggest the market remains in a fragile phase.
Bitcoin Supply in Profit Climbs Toward 60%
CryptoQuant data shows that the percentage of Bitcoin supply currently held at a profit has recovered sharply in recent weeks.
The metric reached 57.5% as of July 22, 2026, a major improvement from the 2026 low of 46.2% recorded on June 30.
The increase means that nearly six out of every ten Bitcoin coins are now worth more than the price at which they were acquired.
CryptoQuant contributor thechessONCHAIN said the recovery represents a positive shift but stressed that the trend needs to continue before it can be viewed as evidence of a confirmed market turnaround.
Analysts Warn of Another False Recovery Signal
Despite Bitcoin’s improving profitability figures, historical data suggests the current rebound could still fail to develop into a sustained recovery.
Previous market cycles have shown that short-term improvements in profitability metrics can sometimes create false signals before another decline occurs.
CryptoQuant analysts pointed out that Bitcoin has already experienced one failed recovery attempt during the current cycle, when profitability indicators briefly improved before reversing lower.
Between April 28 and June 1, long-term holder profitability metrics strengthened, while Bitcoin supply in profit climbed as high as 67%.
However, both indicators later weakened again.
Long-Term Holders Remain a Major Concern
One of the biggest warning signs comes from long-term Bitcoin holders, whose activity continues to show signs of stress.
Long-term holders are defined as investors who have kept their Bitcoin inactive for at least six months.
Their spending behaviour is closely monitored because it often provides insight into broader market confidence.
The long-term holder spent output profit ratio (LTH-SOPR) measures whether these investors are moving coins at a profit or a loss.
A value above 1 indicates that long-term holders are generally selling coins for more than their purchase price, while a reading below 1 suggests coins are being moved at a loss.
Key Indicators Needed Before a Bull Market Confirmation
CryptoQuant researchers explained that previous Bitcoin bear markets have typically ended only after two major conditions are met.
First, the 30-day moving average of long-term holder SOPR must remain above 1 consistently without falling back for extended periods.
Second, Bitcoin supply in profit needs to rise above approximately 64%.
While the current supply profitability rate has improved, it remains below that historical benchmark.
Meanwhile, the 30-day average of long-term holder SOPR has remained below 1 for more than 50 days.
This suggests that the market has not yet reached the conditions normally associated with the beginning of a strong new bullish cycle.
Bitcoin Previously Entered Final Recovery Phase After Heavy Losses
Earlier market data showed that Bitcoin supply in loss exceeded the 50% mark in June, a level that has historically appeared near major market bottoms.
During previous bear markets, when half of Bitcoin supply entered an unrealized loss position, the market often moved closer to the final stages of a downturn before beginning a recovery.
The latest improvement suggests Bitcoin may be following a similar pattern, although analysts say confirmation will require stronger and more consistent data.
Institutional Demand Improves While Retail Activity Remains Weak
Bitcoin demand currently presents a mixed picture.
While institutional interest and allocation into Bitcoin have shown signs of recovery, activity in spot markets remains relatively subdued.
Analysts say stronger demand from both institutional and retail participants would be needed to support a more convincing long-term rally.
Without sustained buying pressure, the recent improvement in profitability metrics could remain temporary.
Bitcoin Recovery Depends on Market Strength
For now, Bitcoin investors have regained some confidence as more BTC supply moves back into profit. However, analysts caution that profitability alone is not enough to confirm the beginning of a new bull market.
The coming weeks will be critical as traders watch whether long-term holder behaviour improves, demand strengthens and key on-chain indicators continue moving in a positive direction.
Until those signals align, Bitcoin’s recovery remains promising but unconfirmed.
