Bitcoin’s 11% Plunge: 2 Bullish Signals Pointing to a Healthy Market Reset

Bitcoin just took an 11% haircut—and the charts are screaming 'buying opportunity' instead of panic.

Signal One: Technical Resilience

Key support levels held firm despite the dip, suggesting this isn't some catastrophic breakdown. The 11% pullback aligns perfectly with historical consolidation patterns before major rallies.

Signal Two: On-Chain Strength

Whale accumulation actually accelerated during the decline—smart money isn't fleeing, it's loading up. Exchange outflows spiked as investors moved coins to cold storage, reducing immediate selling pressure.

Meanwhile, traditional finance types are probably re-calibrating their spreadsheet models for the seventeenth time this month. Bitcoin's doing what Bitcoin does—shaking out weak hands before the next leg up.

Key Takeaways

Bitcoin’s loss supply this cycle is just 9% – A sharp drop from the 25% seen in previous bear markets. Does this mean recent sell-offs are more about taking profits than panicking? 

The market’s still split on whether Bitcoin [BTC] has found a floor or not. 

In fact, the price action showed that it may be on track for three straight daily higher closes to start September – A setup we haven’t seen since early August. That was when BTC tagged $113k, before running back up to $124k over the next two weeks.

If this setup holds, the STH NUPL might steer clear of the red (capitulation) zone. This WOULD be unlike last week’s BTC dip under $110k that came with $943 million in realized losses, marking a post-April FUD peak.

Source: Glassnode

However, here’s the interesting part.

Despite that sell-off, Bitcoin’s Net Realized Profit/Loss (NRPL) didn’t flip red. Instead, it rocketed to a one-month high, showing $4.2 billion in net realized profits, totally different from the typical bear market flush.

Case in point – Back in 2022, bitcoin dropped by 63% by year-end, with the NRPL flipping red as investors started selling at a loss. So, does this current divergence signal that market conviction in Bitcoin is holding strong?

Bitcoin’s loss supply signals calm, not capitulation

When sellers’ cost basis is above BTC spot, it’s typically a bullish setup.

On the flip side, if underwater holders start offloading, it can trigger panic-mode, capping any rebound as future conviction fades. From what we’ve seen, Bitcoin’s structure appeared to be leaning bullish at press time. 

Consider this – At $110k, just 9% of BTC’s supply seemed to be underwater, with up to 10% unrealized losses. For comparison, the bottom this cycle saw over 25% of the supply underwater, with losses up to 23%.

Source: Glassnode

Simply put, Bitcoin’s underwater holders aren’t panic selling right now. 

By contrast, in full-blown bear markets, over 50% of supply has gone underwater with losses up to 78%. As it stands, most BTC is above water, with the NRPL still green at $4.2 billion in net realized profits.

This is a sign that rally conviction has been holding strong. Bitcoin investors are taking profits, rather than selling at a loss. Hence, BTC’s latest 11% dip may just be a healthy reset, not a full-blown capitulation.