Bitcoin (BTC) Triggers Rare Bullish Indicator for Only the Fifth Time Ever

TLDR

• Bitcoin’s recent bear cycle produced a roughly 55% decline, significantly gentler than the 70-80%+ collapses of previous downturns.
• Market observers point to ETF adoption, institutional participation, and bitcoin’s expanded market cap as drivers of reduced volatility.
• A rare cost basis crossover between short and long-term holders has emerged for just the fifth time ever, historically signaling bullish momentum.
• Bitcoin ETFs attracted $2.06 billion across three consecutive trading sessions last week, with a single-day peak of $999 million.
• While analysts debate the primary catalyst, consensus leans toward future cycles featuring reduced upside peaks and less severe corrections.

The latest downturn in bitcoin’s price cycle delivered approximately a 55% decline from its October 2025 all-time high. While that represents a significant correction by conventional market standards, it marks a notable departure from bitcoin’s historical volatility patterns.

During the 2021-2022 bear market, bitcoin plummeted over 75% from its peak near $69,000. Previous cycles witnessed even steeper declines exceeding 80%. The characteristic boom-and-bust volatility that defined bitcoin’s early years appears to be moderating.

Market analysts attribute this shift to several structural changes. Chief among them is the introduction of spot bitcoin exchange-traded funds, which launched in January 2024.

How ETFs Changed Who Owns Bitcoin

Prior to ETF availability, bitcoin holders consisted primarily of retail enthusiasts and cryptocurrency-specialized funds. These participants typically maintained substantial portfolio weightings in bitcoin.

ETFs unlocked access for registered investment advisers and conventional institutional capital. These newer market entrants generally allocate modest portfolio percentages to bitcoin exposure, commonly around 2%.

According to Ryan Rasmussen, research director at Bitwise, a 50% price correction impacts these smaller allocations far less severely than concentrated positions. This fundamental shift influences overall market behavior during volatility events.

Portfolio rebalancing mechanisms also contribute. When bitcoin prices decline, advisers maintaining fixed allocation targets purchase additional exposure to restore desired weightings. Conversely, sharp rallies trigger partial selling to maintain allocation discipline.

This systematic approach provides downside support during selloffs while potentially limiting rally extremes.

However, not all experts attribute the change solely to ETFs. Jim Ferraioli, who leads crypto research at Schwab, emphasizes bitcoin’s expanding market capitalization. With valuation approaching $2 trillion, substantially larger capital flows are required to generate equivalent percentage price movements compared to earlier cycles.

A Fifth Bull Market Signal Appears

In separate analysis, CryptoQuant researchers identified a technical indicator that historically precedes sustained recoveries. The metric compares the average acquisition cost of recent buyers versus established long-term holders.

When short-term holder cost basis crosses above long-term holder averages, it has consistently preceded major turning points. This crossover has now materialized for the fifth occurrence in bitcoin’s history, following previous instances in 2012, 2015, 2019, and 2023.

Darkfost, the analyst who published the findings, indicated this pattern reinforces recovery signals he initially identified in July. He acknowledged that technical indicators carry inherent uncertainty and aren’t infallible.

The calculation excludes coins dormant for over seven years, treating those holdings as effectively removed from active circulation.

Concurrently, spot bitcoin ETF products experienced robust demand throughout last week. These investment vehicles absorbed $2.06 billion across three trading sessions, based on Farside Investors data.

September 21 marked the strongest single-day performance with $999 million in net inflows, establishing the highest daily total recorded in 2026. Subsequent sessions registered $714.7 million and $346.9 million respectively.

In a September 22 research note, CryptoQuant CEO Ki Young Ju suggested increasing institutional participation may produce more moderate price cycles moving forward. His projections anticipate bitcoin reaching three to five times current valuations during this cycle, followed by a comparatively modest correction phase.