On-chain analysis is pointing to a familiar kind of late-cycle stress in Bitcoin: investors appear to be running out of profit and increasingly spending coins at a loss. According to a CryptoQuant analyst posting under the name Darkfost, the ratio of spent Bitcoin outputs that are in profit versus at a loss has dropped to the lowest level seen in this bear market cycle.

The signal is notable because it has historically aligned with bear-market bottoming phases—periods when long-term holders tend to find more favorable risk-reward conditions, even if the market still feels unstable for weeks.

Key takeaways

• CryptoQuant analyst Darkfost says the Bitcoin UTXO profit/loss spent-output ratio has hit the cycle’s lowest point.
• He describes the move as the first trigger of this kind since the correction began, indicating more widespread capitulation.
• The prior time the metric was this low was during the mid-2023 bear market, when Bitcoin traded around $26,000.
• Other on-chain observers agree price may be beyond the first breakdown, but warn the base-formation phase is still underway.
• Near-term uncertainty could rise alongside geopolitical developments, as BTC reacts to evolving risk conditions.

Bitcoin’s “spent at a loss” signal reaches a cycle low

Darkfost highlighted an on-chain pattern derived from Bitcoin unspent transaction outputs (UTXOs). In his view, the latest move reflects capitulation: more coins are being spent after being underwater than at a profit.

In a post on Saturday, Darkfost said the UTXO metric—specifically the ratio of the number of UTXOs spent in profit versus at a loss—has fallen to its lowest point in the current bear market cycle. He added that it is the first time the signal has triggered since the correction started.

“This signal… demonstrates that the number of UTXOs spent at a loss is reaching significant levels, reflecting the start of a broader capitulation,” Darkfost said, framing the development as an indicator that the market is entering a bottoming phase.

Darkfost also argued that historically, these windows have tended to be profitable for long-term investors, because they often coincide with a stage where the majority has “given up and loses interest.” At the same time, he cautioned that the transition is not instantaneous and should be understood on a long time horizon.

Why the signal matters: capitulation can take time

The key nuance in the on-chain research is timing. Even if the UTXO profit/loss ratio has reached a bear-market extreme, market behavior can remain unsettled afterward. Analyst DurdenBTC echoed that point, stating that the signal “caught every cycle low since 2016,” but warning it will “still feel terrible for weeks.”

DurdenBTC’s commentary suggested that investors should not interpret a capitulation trigger as a guarantee of immediate stabilization. Instead, it can be read as evidence that selling pressure is becoming more exhausted, while price still needs time to form a durable base.

That distinction is important for traders and investors because on-chain capitulation signals can cluster around major inflection points while price action still oscillates. The more useful takeaway is not a precise “bottom price,” but the broader shift in who is selling and at what cost basis—an environment that often changes the character of subsequent moves.

What else is changing on-chain: SOPR and exchange inflows

Darkfost later reiterated the theme in a separate update, saying long-term holders are starting to enter a capitulation phase. In that context, he pointed to the Spent Output Profit Ratio (SOPR) moving into negative territory for that cohort.

However, Darkfost also identified a driver behind the correction: he said the decline has been largely fueled by a rapid increase in BTC inflows to exchanges originating from short-term holders. That distinction matters because it implies the selling pressure may not be uniform across investor groups. Long-term holders can show capitulation patterns, while the immediate supply to exchanges may be more concentrated among those who entered closer to the recent trading range.

For market participants, the interplay between these factors—loss realization signals among longer-duration holders and exchange flows from shorter-duration holders—can help explain why on-chain “bottoming” indicators sometimes appear before volatility meaningfully subsides.

Is Bitcoin stabilizing? Analysts point to base formation, not instant recovery

While some indicators are improving, other on-chain commentary suggests the market is still working through the early stages of recovery. Swissblock said on Saturday that Bitcoin likely moved beyond the initial breakdown, but that the network is “still in the base formation phase.”

In the same general line of assessment, Swissblock described conditions as mixed: price is stabilizing, yet momentum remains deeply negative. The implication is that even with a capitulation trigger on the UTXO profit/loss ratio, traders should expect a process rather than a straight-line rebound.

The current narrative, therefore, looks like a transition from active distribution toward early stabilization—where the worst of forced selling may be passing, but market structure and momentum have not fully repaired.

External risks: geopolitical headlines may add volatility

Beyond on-chain data, near-term risk factors can still influence Bitcoin’s tape. The article notes potential uncertainty and selling pressure linked to resumed strikes by the US military on Iranian targets over the weekend.

Central Command reported that US fighter jets conducted strikes on 10 Iranian military targets across multiple locations in and near the Strait of Hormuz following an Iranian drone attack on a commercial ship. At the time of reporting, BTC traded around $59,800 early on Sunday morning before recovering the $60,100 level.

This matters because capitulation signals don’t eliminate macro and geopolitical volatility. In practice, the market can still test support levels even while on-chain metrics suggest profit exhaustion is progressing.

Going forward, readers should watch whether the capitulation signals deepen or fade—particularly the continued behavior of SOPR for long-term holders and whether exchange inflows from short-term holders remain elevated or normalize—while also tracking whether momentum indicators improve as geopolitical risk stabilizes.

Bitcoin’s on-chain “spent profit” signals are flashing a familiar pattern associated with past bear-market turning points, according to CryptoQuant analysis shared over the weekend.

Analyst known as Darkfost said the ratio of Bitcoin unspent transaction outputs (UTXOs) spent at a loss versus those spent in profit has dropped to the lowest level in this bear-market cycle, a move that typically reflects broader capitulation among holders rather than a single wave of short-term selling.

Key takeaways

• CryptoQuant’s Darkfost highlighted a sharp fall in the UTXO profit/loss spending ratio, reaching the weakest point of the current bear-market cycle.
• The signal last appeared in mid-2023 during the prior bear-market depth, when BTC traded near the $26,000 area.
• Other analysts agreed the reading matches cycle-low behavior, but warned that “bottoming” can still take time and feel painful for weeks.
• Darkfost also linked the correction’s momentum to rising short-term holders sending BTC to exchanges.
• Macro/geopolitical uncertainty remains a near-term risk as resumed US strikes against Iranian targets continue to affect sentiment.

UTXO profit/loss ratio hits cycle-low levels

Darkfost’s core claim is rooted in how Bitcoin’s UTXOs are “spent”—specifically whether the outputs being moved on-chain were created when the coins were worth more or less than where they are being spent now.

According to Darkfost, the number of UTXOs spent in profit relative to those spent at a loss has fallen to its lowest level this cycle. He said this is the first time the metric has triggered since the beginning of the current correction, suggesting the market is shifting into a more mature phase of capitulation.

In his view, the resulting configuration points to a bottoming process rather than an immediate, clean reversal. He also stressed that such periods typically unfold over a “long timeframe,” warning that investors should expect continued stress even after the signal fires.

What this has meant in past bear markets

The same style of signal has historically been associated with bear-market lows. Darkfost noted that the last time the ratio dropped to comparable levels was during the previous bear-market depths in mid-2023, when BTC prices fell to roughly $26,000.

DurdenBTC—another analyst who referenced the UTXO ratio—said the reading has “caught every cycle low since 2016.” At the same time, he cautioned that price action can remain rough even after the charted bottom signal appears: in his words, it can “still feel terrible for weeks,” and buying may not look comfortable immediately because the indicator exists precisely when selling pressure is at its most intense.

“It’s caught every cycle low since 2016, and it will still feel terrible for weeks,” DurdenBTC wrote in response to the same UTXO signal.

Capitulation underway, but exchange inflows still matter

Darkfost reiterated the conclusion in a separate post, saying long-term holders are starting to move into a “capitulation phase.” He connected this to SOPR (Spent Output Profit Ratio) behavior for that cohort, noting that it is increasingly moving into negative territory—an on-chain condition often interpreted as realized losses for the group spending older coins.

However, the analyst also underscored that not all price weakness has the same source. He said the correction has been driven largely by a rapid increase in BTC inflows to exchanges from short-term holders. That matters because exchange inflows can increase the probability of near-term selling pressure, even if broader capitulation signals suggest longer-term investors are beginning to absorb supply.

Swissblock added a complementary view on the structure of the decline, stating that Bitcoin has likely moved beyond the initial breakdown, but that the market is still in a “base formation phase.” In other words, a stabilization phase can arrive before a clear trend reversal, and momentum may remain subdued while the market works through its supply/demand imbalance.

Swissblock said price is stabilizing, yet momentum remains deeply negative, and Bitcoin’s “impulse” has only just returned to neutral.

Near-term risk: renewed US strikes and geopolitical pressure

While on-chain readings can help frame the longer arc of the cycle, immediate sentiment can still be heavily influenced by outside developments. The article’s outlook flagged potential uncertainty and increased selling pressure following resumed strikes by the US military on Iranian targets over the weekend.

According to Central Command, US fighter jets struck 10 Iranian military targets at multiple locations in and near the Strait of Hormuz late on Saturday, following an Iranian drone attack on a commercial ship. At the time of writing, BTC dipped to around $59,800 in early trading on Sunday morning before recovering the $60,100 level.

For traders and short-horizon investors, the takeaway is that even if capitulation signals are flashing, the path to a durable bottom can be uneven—especially when geopolitical headlines reintroduce risk-off behavior.

Going forward, readers should watch whether exchange inflows from short-term holders continue to rise or start to cool, and whether broader holder loss signals persist or transition toward recovery—because those are the data points that will determine whether “bottoming” evolves into a sustained trend shift rather than a brief stabilization.

Analysis of Bitcoin unspent transaction outputs (UTXOs) shows that investors are capitulating, a pattern that has historically coincided with bear market bottoms. 

The ratio of the number of UTXOs spent in profit versus at a loss has fallen to its lowest level this bear market cycle, said CryptoQuant analyst known as Darkfost on Saturday. 

This is the first time this signal has triggered since the start of the correction, “demonstrating that the number of UTXOs spent at a loss is reaching significant levels, reflecting the start of a broader capitulation,” he said. 

The metric shows that markets are entering a bottoming phase, which could be a strategic time to accumulate. The last time it fell this low was in the depths of the previous bear market in mid-2023, when BTC prices fell to around $26,000. 

“These periods have always been profitable for long-term investors,” continued Darkfost. “They correspond to the moment when the majority gives up and loses interest.”

He cautioned that it is a process that takes time, and we are on a long timeframe. 

Bitcoin UTXO profit loss ratio at bear market low. Source: CryptoQuant

“The bottom signal I’ve been waiting for just fired,” said analyst DurdenBTC on Saturday, also commenting on the UTXO ratio. “It’s caught every cycle low since 2016, and it will still feel terrible for weeks,” he added. “If buying here were comfortable, the signal wouldn’t exist.”

Related: Bitcoin faces fresh capitulation risk as 50K BTC moved at a loss

In a separate post, Darkfost confirmed the findings, stating that long-term holders are starting to “enter a capitulation phase,” observing that the Spent Output Profit Ratio (SOPR) is increasingly moving into negative territory for this cohort. 

However, he also said that this correction has been largely fueled by the rapid increase in BTC inflows to exchanges coming from short-term holders.

Meanwhile, onchain analytics firm Swissblock said on Saturday that Bitcoin has likely moved beyond the initial breakdown, but “we’re still in the base formation phase.”

“Price is stabilizing, yet momentum remains deeply negative, and Bitcoin impulse has only just returned to neutral.”

Selling pressure may increase 

Uncertainty and selling pressure may increase following resumed strikes by the US military on Iranian targets over the weekend. 

US fighter jets conducted strikes on 10 Iranian military targets at multiple locations in and near the Strait of Hormuz late on Saturday in response to an Iranian drone attack on a commercial ship, reported Central Command. 

BTC prices dipped to $59,800 in early trading on Sunday morning, but had recovered the $60,100 level at the time of writing. 

Magazine: AI is banking the unbanked in Africa… faster than crypto

Fidelity Digital Assets is pushing back on a central criticism of Bitcoin’s long-term security: that falling block rewards from repeated halvings will eventually weaken incentives for miners and make sustained attacks more feasible. In a new research report, Fidelity argues that Bitcoin’s economic model is broader than issuance alone and that the network’s security can remain robust even as subsidies decline.

The report, authored by Fidelity research analyst Daniel Gray, reiterates that transaction fees and other market incentives help miners maintain profitability and continue contributing hash power. The debate matters to investors and builders because Bitcoin’s fixed issuance schedule steadily reduces new coin supply until the block subsidy disappears—leaving the question of whether fees and incentives will fully replace that funding over time.

Key takeaways

• Fidelity argues Bitcoin’s security relies on multiple economic forces, not just block rewards.
• Gray cites historical miner incentives strengthening alongside Bitcoin’s price, despite declining issuance across halving cycles.
• Miners still face intense near-term financial pressure, even as the long-term security narrative remains contested.
• Publicly traded miners’ shift toward AI and high-performance computing highlights costs and operational demands that differ from typical mining setups.

Why Fidelity says halving won’t automatically erode security

One of the most persistent concerns around Bitcoin’s programmed supply is that each quadrennial halving reduces the block subsidy that miners earn. Critics contend that, over the long run, declining issuance could lower miner revenue and weaken incentives—unless transaction fees rise enough to compensate for the reduction.

Fidelity’s new analysis challenges that framing by arguing that block rewards are only one part of the security equation. According to the report, miners are also supported by transaction fees and by broader market incentives that keep attacks economically unattractive. Put simply, the network does not depend solely on how many new coins are created per block; it depends on whether miners can still justify securing the chain in the face of costs and risk.

Fidelity’s report also engages with the larger timeline investors watch: Bitcoin’s issuance schedule reduces new supply gradually, and eventually the block subsidy will reach zero. That future transition is why the fee-versus-subsidy question remains central for developers, economists, and market participants.

Miner revenue and incentives across halving cycles

Fidelity points to data showing that miner revenue has risen substantially over time, rather than weakening in line with reduced subsidies. Gray notes that since April 20, 2024, miners have been receiving a subsidy of 3.125 BTC per block—down from 6.25 BTC during the prior halving cycle.

In the report, Gray argues that lower issuance hasn’t translated into weaker incentives because Bitcoin’s rising price has more than offset the decline in block rewards. He also highlights the growth in average daily miner revenue, which he says increased from roughly $26,300 during Bitcoin’s first halving cycle to more than $40.2 million at present.

“Despite declining issuance, miner incentives — and by extension, network security — historically strengthened alongside Bitcoin’s price,” Gray writes. The underlying implication is that if miners continue to capture enough value from the combination of price, fees, and other economic dynamics, the network’s security budget can remain sufficient even as subsidy-based income shrinks.

Fidelity’s argument is particularly relevant for readers who view halvings as deterministic security “stress tests.” Instead of treating reduced issuance as an automatic negative, the report frames miner incentives as a responsive system that has historically adapted when the asset price and fee environment improve.

The security debate versus miners’ real-world financial strain

While Fidelity emphasizes long-term economic resilience, the same period has also exposed serious near-term pressures for many mining firms—especially those operating as public companies. Industry commentary cited in connection with the report describes the current environment as among the most difficult on record, pointing to a combination of lower mining rewards, rising costs, and increasing competition.

That gap between long-term theory and short-term operating reality is where the industry’s behavior becomes important to watch. The source material notes that some miners have diversified into artificial intelligence and high-performance computing, using existing power infrastructure and data center assets to pursue demand from AI workloads instead of relying solely on Bitcoin mining.

In this context, an earlier Cointelegraph report referenced a VanEck estimate suggesting publicly traded miners could require up to $50 billion in additional capital to fully transition to AI infrastructure. The scale of that estimate underscores why many mining companies are making strategic pivots now: even if long-term Bitcoin security remains intact, the companies themselves may need liquidity and capital to remain competitive and operationally flexible.

Why “AI pivot” operations are harder than mining

One reason the pivot to AI and HPC is costly—and not simply a rebranding of mining—is that uptime, reliability, and facility requirements differ from typical mining setups. A quote attributed to Blocksbridge Consulting in the source material contrasts the two environments: a Bitcoin mine, the publication notes, can run with relatively simpler infrastructure and ASIC fleets that can tolerate faster curtailment. AI and HPC facilities, by contrast, require higher standards for continuous operation.

According to the same source, AI and HPC deployments demand greater electrical redundancy, improved cooling, tighter network requirements, and more responsive customer support—factors that add both engineering complexity and capital intensity.

This operational reality can matter for investors and analysts trying to interpret miner behavior. If mining economics remain uncertain on a quarter-to-quarter basis, firms may pursue non-Bitcoin revenue streams not because Bitcoin’s security thesis is wrong, but because maintaining balance sheets and meeting facility requirements in adjacent markets can be just as challenging as competing on hash rate.

Looking ahead: the fee question remains the test

Fidelity’s report argues that Bitcoin can stay secure even as issuance falls, but the broader market will still be watching the transition from subsidy-led revenue to fee-led revenue. The most important near-term signals are how transaction fee levels evolve relative to miner costs, and whether miners’ financial restructuring efforts can be sustained without undermining their ability to keep contributing to network security.

Fidelity Digital Assets has pushed back on worries that Bitcoin’s security will weaken as block subsidies shrink through future halvings. In a research report authored by Daniel Gray, Fidelity argues that Bitcoin’s long-term protection is supported by a broader set of economic incentives beyond new coin issuance—particularly transaction fees and the costliness of mounting sustained attacks.

The debate matters because Bitcoin’s issuance schedule mechanically reduces the block reward every four years, eventually turning the network into one primarily funded by fees. Critics have long argued that if transaction fees fail to rise enough to replace falling subsidies, miners’ incentives could weaken and the security budget for the chain could erode.

Key takeaways

• Fidelity says Bitcoin’s security depends on more than block rewards, emphasizing transaction fees and broader incentives that make attacks prohibitively expensive.
• Gray highlights that miner incentives have historically strengthened alongside Bitcoin’s price, even as issuance falls across halving cycles.
• Since the April 20, 2024 halving, the block subsidy is 3.125 BTC per block, down from 6.25 BTC previously.
• Average daily miner revenue has increased across cycles—from about $26,300 early in the prior halving era to more than $40.2 million today, according to the report.
• Despite Fidelity’s long-term view, publicly traded miners still face near-term funding and operational pressures, contributing to an AI and HPC shift.

Fidelity’s argument: security isn’t only about subsidies

Fidelity’s report challenges a core criticism of Bitcoin’s halving design: that each quadrennial cut reduces miners’ income and could ultimately impair the network’s ability to sustain high levels of mining participation. The concern typically centers on the idea that lower block rewards must eventually be offset by higher transaction fees—or else miners’ profitability could drop to a level that discourages security spending.

Gray’s conclusion is that this framing understates how Bitcoin’s incentive system works in practice. According to Fidelity, the network is not secured by issuance alone. Transaction fees, market dynamics, and other economic forces can keep miners motivated to invest in and maintain the infrastructure needed to protect the blockchain.

In other words, the report argues that declining subsidies do not automatically translate into declining incentives. If the total revenue miners earn—issuance plus fees—holds up or grows, then the security that depends on miners’ willingness to keep operating remains supported.

The post-halving revenue picture

Fidelity anchors its case in the latest halving mechanics and the observed changes in miner income. Since April 20, 2024, Bitcoin miners have received a subsidy of 3.125 BTC per block, compared with 6.25 BTC during the prior cycle.

Gray argues that the reduction in issuance has not weakened miner incentives, largely because Bitcoin’s market price has risen enough to more than compensate. Fidelity points to growth in average daily miner revenue, stating it increased from roughly $26,300 during Bitcoin’s first halving cycle to more than $40.2 million at present.

“Despite declining issuance, miner incentives — and by extension, network security — historically strengthened alongside Bitcoin’s price,” Gray wrote, according to the report.

This is a meaningful distinction for investors and builders: it implies the pathway from subsidies to fee-based security may be less abrupt than critics assume. Instead of treating the halving as an immediate security stress test, Fidelity frames the outcome as dependent on how fees and market conditions evolve relative to the declining reward schedule.

Why transaction fees are central—and why uncertainty remains

Even with Fidelity’s argument, the question of how Bitcoin transitions to fee-led security is still the focal point of long-term risk analysis. The network’s supply schedule is fixed, meaning new issuance will continue to shrink until it eventually disappears. The open uncertainty is whether transaction fees, in combination with other economic forces, will reliably sustain miner incentives through that transition.

Fidelity’s report does not remove that uncertainty; it addresses the claim that halving alone inevitably damages security incentives. By pointing to historical patterns—where miner incentives rose despite declining issuance across previous halving cycles—the report suggests the market has previously adjusted in ways that preserved or strengthened miner profitability.

For readers, the practical takeaway is that monitoring should extend beyond the headline halving reward. The combination of fee levels, total miner revenue, and the broader price trend will likely be more informative indicators of whether security spending remains well supported over time.

Near-term pressure for miners: AI and HPC expansion

While Fidelity frames Bitcoin’s long-term security economics as resilient, the near-term reality for many publicly traded miners has been more difficult. Multiple analysts and industry narratives cited in the broader coverage describe a challenging environment shaped by reduced mining rewards, higher costs, and intense competition.

That pressure has helped drive diversification strategies. Some miners have moved toward artificial intelligence and high-performance computing, leveraging existing power infrastructure and data center assets rather than relying only on Bitcoin mining revenues.

Earlier coverage referenced in the article noted that several miners have been pursuing these alternatives, including a shift towards AI-oriented infrastructure. Separately, a report by VanEck estimated publicly traded miners could require up to $50 billion in additional capital to fully transition to AI infrastructure—an illustration of how large the investment hurdle can be when expanding beyond crypto mining.

Blocksbridge Consulting, quoted in a Miner Weekly publication, highlighted operational differences that matter for business planning: it argued that Bitcoin mining can often be supported with modular infrastructure and ASIC fleets that tolerate fast curtailment, while AI and HPC facilities require higher standards for uptime, cooling, redundancy, networking, and customer support.

This creates an asymmetry investors should pay attention to. Even if Bitcoin’s security budget holds up in the long run, individual mining companies may still face financing constraints and execution risk while they adapt to changing economics and technology demands.

Readers should watch how miners balance these two tracks—supporting Bitcoin’s security today while making capital-heavy bets on future revenue streams. The timing of that pivot, and the ability to raise funds without impairing balance sheets, may become an increasingly important variable for equity holders as the industry continues adjusting to post-halving economics.