Could Bitcoin be nearing a bottom even as on-chain panic reaches its highest level in 2026?

Bitcoin may be moving closer to a market bottom, but the latest on-chain panic signals do not prove that the final low has arrived. Several indicators suggest that sellers are becoming exhausted, while weak demand and security-related wallet movements continue to make the picture less certain.

Bitcoin’s on-chain activity has climbed to its highest level of 2026 as hundreds of thousands of coins changed addresses during a period of weak price action. Some analysts believe this type of activity often appears near major market turning points, but the Coldcard security incident may be making the signal look more extreme than it really is.

Why is Bitcoin’s on-chain panic rising so sharply?

Bitcoin’s on-chain panic is rising because an unusually large amount of BTC has moved during a period of market stress. K33 reported that about 890,000 BTC became active over seven days, the highest seven-day active-supply figure recorded in 2026.

Active supply measures coins that have moved within a particular period, but it does not explain why those coins moved. A high reading can reflect selling, profit-taking, fear, exchange transfers, wallet maintenance, security concerns, or internal transactions.

Periods of extreme activity have appeared near both local market tops and local bottoms in past cycles. Investors often move coins to exchanges during declines, while buyers and profit-takers become more active during strong rallies.

The current spike stands out because Bitcoin’s price has remained relatively quiet compared with the amount of activity visible on the blockchain. K33 described the pattern as panic becoming visible on-chain, even though Bitcoin was trading within one of its narrowest ranges in several years.

Glassnode’s broader indicators also show that Bitcoin has been experiencing one of its longest capitulation periods since the 2022 bear market. Its research shows that Bitcoin has spent months below important investor cost levels, leaving many recent buyers with unrealized losses.

Still, high blockchain activity should be treated as an alert rather than a complete bottom signal. Investors need to know where the coins went, whether they reached exchanges, and whether the owners accepted losses when moving them.

Is the Coldcard incident distorting the bottom signal?

Yes, the Coldcard incident may be making Bitcoin’s on-chain panic appear more connected to market selling than it actually is. Some users may be moving their holdings because they are worried about wallet security, not because they expect Bitcoin’s price to fall.

The supplied reports link much of the recent active-supply increase to an ongoing Coldcard-related attack. Reported victims, suspected losses, and attacker addresses continued to grow as researchers identified additional transaction patterns.

A wallet owner who believes a seed phrase or signing device may be exposed has a strong reason to create a new wallet and transfer funds. That movement appears on-chain, but it does not necessarily create selling pressure because the owner may continue holding the same amount of Bitcoin.

Attackers may also move stolen Bitcoin through several addresses to make the funds harder to track. Those transfers can increase active-supply figures even when the stolen coins have not reached a liquid exchange or been converted into dollars.

Other users may move funds into multisignature setups, centralized custodians, or alternative hardware wallets after hearing about the incident. Coldcard’s own educational material explains that air-gapped signing, transaction verification, operational security, and multisignature arrangements can reduce particular wallet risks.

The key question is therefore not simply how much Bitcoin moved, but how much moved to exchanges and was sold at a loss. Without that separation, the active-supply spike may mix real market capitulation with unrelated security transfers and address changes.

Fun fact: On July 31, 2026, Bitcoin’s active address count hit approximately 980,000, the highest reading since December 2024. 

What evidence suggests Bitcoin may be building a bottom?

Bitcoin may be forming a bottom as selling pressure has eased after months of investor stress. Glassnode has described the market as being in a bottom-building process, with several measures showing stabilization rather than a confirmed bullish reversal.

Bitcoin spent roughly five months below the True Market Mean and the Short-Term Holder Cost Basis, according to Glassnode’s July research. Long periods below these investor cost levels often indicate that the market is trading in a deep-value area where many participants are underwater.

Long-term holders also realized large losses during the decline, with their loss realization accounting for a significant share of total realized value. Glassnode reported that long-term-holder losses reached levels not seen since late 2022, showing that stress had spread beyond short-term traders.

Another constructive signal is that the intensity of capitulation has started to fade at different points during the year. Glassnode’s June data showed improving taker behavior, easing fear in options markets, and reduced selling pressure, although trading volume and capital inflows remained weak.

The holder base has also remained relatively resilient, with a large share of supply still controlled by long-term investors. Glassnode’s July reports found that ownership remained concentrated among conviction-driven holders even while some investors continued using price rebounds to reduce exposure.

These conditions support the idea that Bitcoin is closer to a bottom than a market top. They do not confirm that the lowest price is already behind the market, but they show that a transfer from weaker holders to stronger holders may be taking place.

Fun fact: Mudrex highlights the four-yearly halving that occurred in April 2024 as a reason to expect a bottom in the late 2026 time frame. 

Could this be a local bottom instead of the final low?

Yes, Bitcoin could establish a local bottom and produce a meaningful recovery without completing the entire bear-market cycle. A local turning point may last several days or months, while the final cycle bottom is the lowest price before a lasting bull market begins.

This distinction is missing from many bottom predictions because analysts often use the terms interchangeably. A temporary recovery from deeply oversold conditions can look convincing before the price returns to test the same support area or falls to a new low.

Bitcoin has already shown this type of behavior during 2026, with sharp declines followed by rebounds and long periods of range-bound trading. Glassnode reported that Bitcoin fell near $58,000 before recovering toward the mid-$60,000 range, but spot participation remained weak and the market stayed in consolidation.

Historical cycle models suggest that late 2026 could be a possible period for the broader market low. Some analysts base that view on previous halving cycles, typical bear-market durations, and the amount of time that has passed since Bitcoin’s reported 2025 peak.

However, Bitcoin has completed only a small number of full halving cycles, so the historical sample is limited. Spot exchange-traded funds, corporate Bitcoin holdings, a larger derivatives market, and changing interest-rate conditions may cause the current cycle to behave differently.

Investors should therefore view late-2026 forecasts as possible scenarios rather than fixed deadlines. The current conditions may support a short-term floor, but Bitcoin could still retest lower levels if demand stays weak or global financial conditions deteriorate.

What is still preventing a confirmed market bottom?

Weak buying demand is the main reason Bitcoin’s bottom remains unconfirmed. Selling pressure has eased, but the market has not yet shown the broad and sustained accumulation normally needed for a lasting trend reversal.

Glassnode reported that spot markets continued to experience net selling even as transaction activity increased. That pattern suggested available liquidity was being used more for distribution than accumulation, which limited the strength of Bitcoin’s recovery.

Institutional demand has also been inconsistent throughout the downturn. Glassnode found that spot Bitcoin ETF flows improved during parts of July, but trading volumes remained measured, and earlier outflows showed that large investors were still cautious.

Options traders have maintained demand for downside protection even as other derivatives indicators became less defensive. This suggests that professional traders see recovery potential but continue protecting their portfolios against another sharp decline.

Bitcoin also faces overhead supply from investors waiting to sell near their original purchase prices. When price approaches the Short-Term Holder Cost Basis or other major cost levels, underwater holders may exit at breakeven and slow the recovery.

Macroeconomic risks add another layer of uncertainty because higher yields, a stronger dollar, economic weakness, or falling equity markets can reduce demand for risk assets. A recession may eventually lead to easier monetary policy, but its early stages can also trigger liquidations, redemptions, and forced selling.

TL;DR

• Bitcoin is showing several conditions commonly associated with a market bottom, including heavy realized losses, prolonged capitulation, reduced leverage, and signs that selling pressure is slowing.
• Around 890,000 BTC reportedly moved over seven days, marking the highest active-supply reading of 2026, but some of that movement may be connected to the Coldcard security incident.
• Security-related transfers, wallet changes, and attacker transactions should not automatically be treated as investor selling.
• Glassnode says Bitcoin is in a bottom-building phase, although weak spot demand, ETF uncertainty, and defensive options positioning show that the process is not complete.
• Bitcoin could be forming a local bottom near current levels without establishing the final low of the broader bear market.
• A stronger bottom confirmation would require improving ETF flows, lower exchange deposits, fading realized losses, controlled leverage, and a recovery above major investor cost levels.

This article was made with AI assistance and human editing.

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