The macroeconomic environment remains unclear, and global trade relations are undergoing restructuring. This uncertainty has intensified the volatility of U.S. Treasury bonds and the stock market.
In a challenging economic backdrop, Bitcoin has recorded its largest decline since the current cycle began. Nevertheless, the drop remains within the range of previous bull market corrections. Furthermore, the median decline in this cycle is still an order of magnitude lower than those in past bull markets, highlighting the resilience of demand.
The liquidity of the entire digital asset ecosystem continues to tighten, reflected in the decline of capital inflows and the stagnation of stablecoin growth.
Investors are under immense pressure and are currently facing the largest unrealized losses in history. However, these losses are largely concentrated among new market participants, while long-term holders generally remain in a profitable state.
Macroeconomic uncertainty remains prevalent
As the Trump administration attempts to overturn and restructure global trade relations, the uncertainty of the macroeconomic outlook is becoming increasingly prominent. Currently, U.S. Treasury bonds serve as collateral and the foundation of the financial system, with the 10-year Treasury bond being regarded as the benchmark risk-free interest rate.
A key objective of the government is to lower the yield on the 10-year Treasury bonds, and it achieved preliminary results in the first few months of this year, with the yield dropping to 3.7% amid widespread market sell-offs. However, this situation was short-lived, as the yield subsequently soared to 4.5%, erasing the decline and causing significant volatility in the bond market.
The MOVE Index can quantify the chaotic behavior of the bond market. This index is a key measure of bond market stress and volatility, derived from the 30-day implied volatility of options prices based on U.S. Treasury securities across different maturities.
Measured by this indicator, the volatility of U.S. Treasury bonds has risen dramatically, highlighting the extreme uncertainty and panic among bond market investors.
Source: Tradingview
In addition, the Volatility Index (VIX) can also be used to measure the turbulence of the U.S. stock market, which measures the market's expectation of the 30-day volatility of the U.S. stock market. The volatility of the bond market is also significantly reflected in the stock market, and the current VIX volatility is similar to the volatility values during the COVID-19 crisis in 2020, the global financial crisis in 2008, and the internet bubble period in 2001.
The volatility of the underlying collateral in the financial system often leads to capital withdrawals by investors and a tightening of liquidity conditions. Given that Bitcoin and digital assets are among the tools most sensitive to liquidity, they are naturally affected by volatility and the withdrawal of risk assets.
Source: FRED
In this turmoil, the performance of "hard" assets remains impressive. As investors rush to traditional safe-haven assets like gold, the price of gold continues to soar, reaching a new high of $3,300. Bitcoin was initially sold off alongside risk assets to $75,000, but has since recovered some of its losses, with the trading price rising to $85,000.
As the world gradually adapts to changing trade relations, gold and Bitcoin are increasingly becoming the market focus as global neutral reserve assets. It can be said that the performance of gold and Bitcoin last week conveyed a compelling signal.
Source: Glassnode
Bitcoin maintains resilience
Although Bitcoin is still trading in the $85,000 range, its volatility and pullback have intensified in recent months. The asset has recorded its largest drop since the 2023-25 cycle, with a maximum decline of 33% from its all-time high.
However, the extent of this pullback is still within the range of previous bull market corrections. In macroeconomic events like last week, Bitcoin typically experiences a drop of over 50%, which highlights that modern investors' sentiment towards Bitcoin remains quite robust even in unfavorable conditions.
Source: Glassnode
To quantify the resilience of the current cycle, one can assess the median drawdown situation during previous bull markets.
2011: -22%
2011-2013: -18%
2015-2018: -11%
2018-2021: -19%
2022 and beyond: -7%
The median value of the current cycle's drawdown is smaller than in all previous cases. Since 2023, the drawdown has been smaller and essentially more controllable, indicating that demand conditions are more resilient, and many investors are more willing to continue holding during market turmoil.
Source: Glassnode
Liquidity continues to shrink
In addition, it is possible to assess how macroeconomic uncertainty affects the liquidity status of Bitcoin.
One way to measure the internal liquidity of Bitcoin is the realized market cap metric, which calculates the cumulative net inflow of digital assets. The realized market cap currently reaches a historical high of $872 billion; however, the capital growth rate has shrunk to only +0.9% per month.
In a highly challenging market environment, the capital flowing into this asset continues to show positive growth. Given that the pace of new capital flowing into this asset is slowing down, it indicates that investors have a lower willingness to allocate capital in the short term, and risk aversion may still be the prevailing sentiment at present.
Source: Glassnode
The realized profit and loss indicator constitutes the realized market value and can measure the price difference between the token's purchase price and its selling price on the chain.
Tokens that cost more than their purchase price are considered to have locked in realized profits.
Tokens that are below their purchase price are considered to have locked in realized losses.
Measuring realized profits and losses in Bitcoin terms allows for the standardization of all profit and loss events. Additionally, further refinement has been made by adjusting for volatility (7-day realized volatility), which helps explain the phenomenon of diminishing returns and growth rates of Bitcoin over its 16-year history.
Currently, the profit and loss activities are relatively balanced, and the capital inflow rate is relatively neutral, reflecting the saturation of investor activity within the current price range.
Source: Glassnode
By calculating the difference between realized profits and losses, the realized net profit and loss indicator can be derived. This indicator measures the dominant direction of value inflow/outflow in the network.
By using the volatility-adjusted net realized profit and loss indicator, it can be compared with the cumulative median to distinguish between two market modes.
Prices consistently above the median usually indicate a bull market and net capital inflow.
Continuously staying below the cumulative median is typically seen as a bear market, where Bitcoin experiences net capital outflows.
The market often pushes investors to the brink of maximum pain, usually peaking at turning points in the bull and bear cycles. It can be seen how the volatility-adjusted net realized profit and loss fluctuates around its long-term median, serving as a mean-reversion tool.
This indicator has now returned to a neutral median, indicating that the Bitcoin market is currently at a critical decision point, and it has delineated the boundaries for bulls to re-establish support levels within the current price range.
Source: Glassnode
Stablecoins have become a fundamental asset class in the digital asset ecosystem, serving as quote assets in both DEX and CEX. Evaluating liquidity from the perspective of stablecoins provides a new dimension for analysis, helping to gain a more comprehensive understanding of the liquidity status of digital assets.
The supply of stablecoins continues to grow positively, but has slowed down in recent weeks. This further corroborates that the broader liquidity of digital assets is shrinking, as evidenced by the weakened demand for digital dollars.
Source: Glassnode
Examine Investor Pressure
In the ongoing market turbulence, it is crucial to assess the scale of unrealized losses currently held by Bitcoin investors.
It is noted that when measuring the unrealized losses held in the market, during the market drop to $75,000, unrealized losses reached a new high of $410 billion. When looking at the composition of unrealized losses, it can be seen that most investors hold a drawdown of up to -23.6%.
Compared to the sell-off in May 2021 and the bear market in 2022, the total scale of unrealized losses is larger. However, for individual investors, the market experienced more severe pullbacks, reaching as high as -61.8% and -78.6%, respectively.
Although the total unrealized losses are larger (considering that Bitcoin is now a more valuable asset), individual investors face smaller challenges compared to previous bear markets.
Source: Glassnode
Despite the unrealized losses reaching a historical high, the proportion of profitable positions in circulation supply remains as high as 75%. This indicates that most of the losing investors only bought in after the top pattern appeared.
It is worth noting that the profit supply percentage is approaching its long-term average. Historically, this is a critical area that needs to be defended before the vast majority of cryptocurrencies fall into loss, and it is also a key threshold between bull and bear markets.
A typical feature of a bull market is that profit supply is above its long-term average, and support levels are usually found throughout the bull market.
Historically, there have been periods during bear markets where prices consistently remain significantly below long-term averages, and the frequent pullbacks during bear markets confirm the decline in profitability.
Similar to the net realized profit and loss indicator, if it can be maintained, it will help rebound from the long-term average range.
Source: Glassnode
As the market continues to shrink, the absolute scale of unrealized losses is expected to grow. To explain this phenomenon and standardize different magnitudes of drawdowns, a new metric is introduced here: unrealized losses per percentage drawdown, which represents the loss in Bitcoin terms relative to the percentage drop from the historical peak.
After applying this indicator to the group of short-term holders, it was found that, after adjusting for drawdown depth, their unrealized losses have become quite substantial, comparable to levels seen in the early stages of previous bear markets.
Source: Glassnode
Nevertheless, the current unrealized losses are primarily concentrated among new investors, while long-term holders remain in a state of one-sided profit. However, an important nuance is emerging: as recent top buyers gradually become long-term holders, the level of unrealized losses in this group may rise.
Historically, a significant expansion of unrealized losses among long-term holders often signals a confirmation of a bear market, although there may be some delay after the market peaks. As of now, there is no clear evidence indicating that this pattern shift is underway.
Source: Glassnode
Summary and Conclusion
The macroeconomic outlook remains uncertain, and the ongoing changes in global trade dynamics have intensified significant fluctuations in the U.S. bond and stock markets. Notably, during this challenging period, the performance of Bitcoin and gold has been particularly strong. This could be an encouraging sign indicating that the foundations of the financial system are entering a period of transformation and change.
Despite its remarkable resilience, Bitcoin has not been immune to heightened volatility in global markets, posting its biggest decline since the 2023-2025 cycle. This has greatly affected new market participants, who are now taking on the lion's share of the market losses. However, from an individual investor's perspective, the market has experienced more severe declines in previous cycles, particularly during the bear markets of May 2021 and 2022. In addition, sophisticated and long-term investors remain unaffected by ongoing economic pressures and are almost unilaterally profitable.
Related reading: Fidelity: Has Bitcoin reached the peak of this cycle?
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Glassnode on-chain Weekly Report: The macro environment remains unclear, and losses are mostly from new investors.
Compiled by: Felix,
Key Points
Macroeconomic uncertainty remains prevalent
As the Trump administration attempts to overturn and restructure global trade relations, the uncertainty of the macroeconomic outlook is becoming increasingly prominent. Currently, U.S. Treasury bonds serve as collateral and the foundation of the financial system, with the 10-year Treasury bond being regarded as the benchmark risk-free interest rate.
A key objective of the government is to lower the yield on the 10-year Treasury bonds, and it achieved preliminary results in the first few months of this year, with the yield dropping to 3.7% amid widespread market sell-offs. However, this situation was short-lived, as the yield subsequently soared to 4.5%, erasing the decline and causing significant volatility in the bond market.
! Glassnode Chain Last Week's Report: The macro environment is still uncertain, and most of the losses are new investors
Source: FRED
The MOVE Index can quantify the chaotic behavior of the bond market. This index is a key measure of bond market stress and volatility, derived from the 30-day implied volatility of options prices based on U.S. Treasury securities across different maturities.
Measured by this indicator, the volatility of U.S. Treasury bonds has risen dramatically, highlighting the extreme uncertainty and panic among bond market investors.
Source: Tradingview
In addition, the Volatility Index (VIX) can also be used to measure the turbulence of the U.S. stock market, which measures the market's expectation of the 30-day volatility of the U.S. stock market. The volatility of the bond market is also significantly reflected in the stock market, and the current VIX volatility is similar to the volatility values during the COVID-19 crisis in 2020, the global financial crisis in 2008, and the internet bubble period in 2001.
The volatility of the underlying collateral in the financial system often leads to capital withdrawals by investors and a tightening of liquidity conditions. Given that Bitcoin and digital assets are among the tools most sensitive to liquidity, they are naturally affected by volatility and the withdrawal of risk assets.
Source: FRED
In this turmoil, the performance of "hard" assets remains impressive. As investors rush to traditional safe-haven assets like gold, the price of gold continues to soar, reaching a new high of $3,300. Bitcoin was initially sold off alongside risk assets to $75,000, but has since recovered some of its losses, with the trading price rising to $85,000.
As the world gradually adapts to changing trade relations, gold and Bitcoin are increasingly becoming the market focus as global neutral reserve assets. It can be said that the performance of gold and Bitcoin last week conveyed a compelling signal.
Source: Glassnode
Bitcoin maintains resilience
Although Bitcoin is still trading in the $85,000 range, its volatility and pullback have intensified in recent months. The asset has recorded its largest drop since the 2023-25 cycle, with a maximum decline of 33% from its all-time high.
However, the extent of this pullback is still within the range of previous bull market corrections. In macroeconomic events like last week, Bitcoin typically experiences a drop of over 50%, which highlights that modern investors' sentiment towards Bitcoin remains quite robust even in unfavorable conditions.
Source: Glassnode
To quantify the resilience of the current cycle, one can assess the median drawdown situation during previous bull markets.
The median value of the current cycle's drawdown is smaller than in all previous cases. Since 2023, the drawdown has been smaller and essentially more controllable, indicating that demand conditions are more resilient, and many investors are more willing to continue holding during market turmoil.
Source: Glassnode
Liquidity continues to shrink
In addition, it is possible to assess how macroeconomic uncertainty affects the liquidity status of Bitcoin.
One way to measure the internal liquidity of Bitcoin is the realized market cap metric, which calculates the cumulative net inflow of digital assets. The realized market cap currently reaches a historical high of $872 billion; however, the capital growth rate has shrunk to only +0.9% per month.
In a highly challenging market environment, the capital flowing into this asset continues to show positive growth. Given that the pace of new capital flowing into this asset is slowing down, it indicates that investors have a lower willingness to allocate capital in the short term, and risk aversion may still be the prevailing sentiment at present.
Source: Glassnode
The realized profit and loss indicator constitutes the realized market value and can measure the price difference between the token's purchase price and its selling price on the chain.
Measuring realized profits and losses in Bitcoin terms allows for the standardization of all profit and loss events. Additionally, further refinement has been made by adjusting for volatility (7-day realized volatility), which helps explain the phenomenon of diminishing returns and growth rates of Bitcoin over its 16-year history.
Currently, the profit and loss activities are relatively balanced, and the capital inflow rate is relatively neutral, reflecting the saturation of investor activity within the current price range.
Source: Glassnode
By calculating the difference between realized profits and losses, the realized net profit and loss indicator can be derived. This indicator measures the dominant direction of value inflow/outflow in the network.
By using the volatility-adjusted net realized profit and loss indicator, it can be compared with the cumulative median to distinguish between two market modes.
The market often pushes investors to the brink of maximum pain, usually peaking at turning points in the bull and bear cycles. It can be seen how the volatility-adjusted net realized profit and loss fluctuates around its long-term median, serving as a mean-reversion tool.
This indicator has now returned to a neutral median, indicating that the Bitcoin market is currently at a critical decision point, and it has delineated the boundaries for bulls to re-establish support levels within the current price range.
Source: Glassnode
Stablecoins have become a fundamental asset class in the digital asset ecosystem, serving as quote assets in both DEX and CEX. Evaluating liquidity from the perspective of stablecoins provides a new dimension for analysis, helping to gain a more comprehensive understanding of the liquidity status of digital assets.
The supply of stablecoins continues to grow positively, but has slowed down in recent weeks. This further corroborates that the broader liquidity of digital assets is shrinking, as evidenced by the weakened demand for digital dollars.
Source: Glassnode
Examine Investor Pressure
In the ongoing market turbulence, it is crucial to assess the scale of unrealized losses currently held by Bitcoin investors.
It is noted that when measuring the unrealized losses held in the market, during the market drop to $75,000, unrealized losses reached a new high of $410 billion. When looking at the composition of unrealized losses, it can be seen that most investors hold a drawdown of up to -23.6%.
Compared to the sell-off in May 2021 and the bear market in 2022, the total scale of unrealized losses is larger. However, for individual investors, the market experienced more severe pullbacks, reaching as high as -61.8% and -78.6%, respectively.
Although the total unrealized losses are larger (considering that Bitcoin is now a more valuable asset), individual investors face smaller challenges compared to previous bear markets.
Source: Glassnode
Despite the unrealized losses reaching a historical high, the proportion of profitable positions in circulation supply remains as high as 75%. This indicates that most of the losing investors only bought in after the top pattern appeared.
It is worth noting that the profit supply percentage is approaching its long-term average. Historically, this is a critical area that needs to be defended before the vast majority of cryptocurrencies fall into loss, and it is also a key threshold between bull and bear markets.
Similar to the net realized profit and loss indicator, if it can be maintained, it will help rebound from the long-term average range.
Source: Glassnode
As the market continues to shrink, the absolute scale of unrealized losses is expected to grow. To explain this phenomenon and standardize different magnitudes of drawdowns, a new metric is introduced here: unrealized losses per percentage drawdown, which represents the loss in Bitcoin terms relative to the percentage drop from the historical peak.
After applying this indicator to the group of short-term holders, it was found that, after adjusting for drawdown depth, their unrealized losses have become quite substantial, comparable to levels seen in the early stages of previous bear markets.
Source: Glassnode
Nevertheless, the current unrealized losses are primarily concentrated among new investors, while long-term holders remain in a state of one-sided profit. However, an important nuance is emerging: as recent top buyers gradually become long-term holders, the level of unrealized losses in this group may rise.
Historically, a significant expansion of unrealized losses among long-term holders often signals a confirmation of a bear market, although there may be some delay after the market peaks. As of now, there is no clear evidence indicating that this pattern shift is underway.
Source: Glassnode
Summary and Conclusion
The macroeconomic outlook remains uncertain, and the ongoing changes in global trade dynamics have intensified significant fluctuations in the U.S. bond and stock markets. Notably, during this challenging period, the performance of Bitcoin and gold has been particularly strong. This could be an encouraging sign indicating that the foundations of the financial system are entering a period of transformation and change.
Despite its remarkable resilience, Bitcoin has not been immune to heightened volatility in global markets, posting its biggest decline since the 2023-2025 cycle. This has greatly affected new market participants, who are now taking on the lion's share of the market losses. However, from an individual investor's perspective, the market has experienced more severe declines in previous cycles, particularly during the bear markets of May 2021 and 2022. In addition, sophisticated and long-term investors remain unaffected by ongoing economic pressures and are almost unilaterally profitable.
Related reading: Fidelity: Has Bitcoin reached the peak of this cycle?