Bitcoin Faces Its Biggest Stress Test Since FTX Collapse: What the On-Chain Data Reveals Now

Bitcoin's network is grinding through its most significant pressure cooker moment since the FTX implosion—and the blockchain doesn't lie.

The Hash Rate Reality Check

Mining difficulty just notched another record high. That's the network's automated response to sustained computational power, signaling miners are still betting big—or desperately clinging to efficiency margins. It's a brutal, proof-of-work arms race where only the most optimized operations survive.

Exchange Reserves: The Confidence Meter

Holders are pulling coins off exchanges at a pace that echoes early 2023. This net outflow is a classic bullish signal—it suggests accumulation and a preference for self-custody over quick speculative trades. The market might be fearful, but long-term wallets are getting greedy.

Whale Watching in Shallow Waters

Large transaction volumes are spiking. That typically means institutional-sized players are moving coins, either redistributing or positioning. It creates volatility, but also indicates serious capital hasn't abandoned the asset class—it's just playing a different, more tactical game.

The Macro Overhang

Forget crypto-native drama. The real stressor is the traditional finance landscape: sticky inflation, shifting rate cut expectations, and a risk-off sentiment that treats Bitcoin like a tech stock. It's the ultimate irony—decentralized asset held hostage by central bank whispers and Wall Street's mood swings.

Liquidity: The Silent Squeeze

Market depth on major exchanges remains thin. That means large orders can move the price more dramatically—a hallmark of a fragile market structure. It's a trader's nightmare but a volatility predator's dream.

So, is Bitcoin breaking? The data says no. It's bending, adapting, and displaying a resilience that would make a traditional bank regulator blush—if they understood it. The network's fundamental security is stronger than ever, even as its price action feels weaker. This isn't a collapse; it's a stress test revealing what's truly robust. And the takeaway? Bitcoin's infrastructure is weathering the storm, while the paper-handed narratives are getting washed away. Sometimes, the best thing a maturing asset can do is survive another round of Wall Street's fickle affection—proving its worth isn't in the hype, but in the hashes.

This deep sell off now means Bitcoin is testing historical extremes both from a technical analysis perspective and an on-chain view. The zones being tested now and discussed in this article typically come to light during extended bear markets, which makes the reaction from here especially important. How prices react at these levels will help determine whether the market is forming a durable bottom or entering a deeper downside trend. 

Supply Underwater Reaches Rare Levels

With BTC plunging below its 2021 cycle highs of $69K and accelerating toward a low of $60K, over 9.5 million BTC are now held at a loss. This is the highest supply in loss since January 2023. 

Another clear indication of capitulation can be seen through the Net Realized Profit and Loss (NRPL) chart. This measures the total profit or loss that investors lock in when coins MOVE on-chain. Every Bitcoin has a recorded “last moved price,” often referred to as its cost basis. When a coin moves at a price higher than its cost basis, it is counted as realized profit; when it moves below that level, it is counted as realized loss. 

The metric then aggregates the difference between all realized profits and realized losses across the network each day. While the blockchain cannot directly see whether a coin was sold or off-ramped, large waves of on-chain movement historically coincide with coins being sent to exchanges, redistributed after trades, or liquidated during stress events. For this reason, the metric is widely used as a reliable proxy for whether the market is collectively taking profits or realizing losses. 

The 7 day simple moving average is applied to this chart because daily realized profit and loss can jump significantly and skew readings. By averaging the past seven days, the indicator highlights trends evenly rather than one-day noise. Now when we look at the current state of participants in the market, the current 7 day average NRPL stands at -1.8 Billion per day. This is in stark contrast to bull phases in 2024 and 2025 when this datapoint was well into the profit side, peaking at over 4.5 billion per day during November 2024. 

Largest One-Day Drop Since FTX 

Yesterday’s -13.82% crash was BTC’s largest single day drop since the FTX collapse in November 2022. At that time, the selloff was sparked by the structural failure of a large centralized entity, which shook investor confidence and counterparty risk across the industry. Today, despite Bitcoin and crypto being a much larger and mature asset class, this drop reflects a multi-factor unwind, where macro pressures, geopolitical tensions, leverage and ETF outflows have collectively dented market conviction. 

Liquidations Accelerated the Move 

In the past 24 hours alone, $2.60 billion worth of positions were liquidated, placing this among the ten liquidation events the market has ever seen. However, if you look at the liquidations since January 29th, nearly $10 billion has been erased, making this past week one of the most aggressive deleveraging flushes the market has witnessed. This explains why Bitcoin accelerated to the downside after breaking the first key level of $80.5K and then the April 2025 range low of $74.5K. 

Macro Shock Added Fuel

While leverage and liquidations can accelerate downward price action, the spark usually comes from news and narratives. Over the past week we’ve seen several external factors weigh heavily on crypto, such as US-Iran tensions, the appointment of a potentially hawkish Fed chair in Kevin Warsh, a rising DXY and significant ETF outflows. Yesterday these tailwinds were compounded by the news of weaker than expected U.S. jobs data. 

Initial jobless claims ROSE to 231K vs 212K expected, which means layoffs are increasing. January job cuts were the highest since 2009 while, at the same time, companies announced very few new hiring plans. When layoffs rise and hiring slows together, it becomes a leading indicator of economic weakness and markets quickly begin to price in that risk. 

For crypto, this is usually bearish because it signals a potential liquidity squeeze. Investors become more risk-averse and expectations grow that financial conditions may remain restrictive. We saw indices like the S&P 500 and NASDAQ decline on the back of this news but in risk-off environments like this, assets like crypto are often the first to face intensified selling pressure. Ultimately this news added another LAYER of uncertainty to an already fragile market. 

What Traders Are Watching Next

The current market sentiment hasn’t looked this bleak for years. In fact, the fear and greed index has hit 9, entering an extreme fear territory not seen since the Luna crash. For market participants and analysts, however, the key isn’t to dwell on what’s already happened but to look for future potential scenarios from here. 

The fact is Bitcoin has now entered oversold territories not seen since previous bear market lows and some even indicating deeper extremes. For example, the daily RSI has not been as low as it is since the COVID crash almost six years ago. This could suggest that selling may be stretched in the short term and traders are watching for signs of a relief bounce or momentum change. 

Another key signal traders are watching right now comes from the Bitcoin liquidation heatmap, which is showing an extremely one-sided derivatives market. Short sellers have piled in aggressively, with cumulative short liquidation leverage now sitting at a historic $29 billion. On the other hand, there is very little long-side liquidation liquidity nearby, highlighting just how quickly market positioning has flipped bearish. When positioning becomes this crowded on one side, even a modest move to the upside can trigger cascading liquidations, opening the door for a sharp short-squeeze driven bounce. 

In terms of technical indicators that can act as a support area, the 200 week moving average is the one to keep close tabs on. This currently sits at $58K and represents an important zone that has marked major bottoms in previous Bitcoin cycles.