Bitcoin faces heightened risk of a prolonged bear market if long-term holder liquidity continues to decline, according to on-chain analytics firm Glassnode. The firm's latest report shows long-term holders are still realizing profits at a 408-to-1 ratio over losses, but a compression to 10x or lower could signal a deeper downturn. Short-term buyers have already capitulated, with the market absorbing overwhelming losses since early October.

What Happened: Liquidity Metrics Decline

Glassnode released a weekly report examining Bitcoin market liquidity changes following recent price weakness. The analytics firm measured liquidity through the Realized Profit/Loss Ratio, which tracks the ratio between profit and loss investors realize through transactions.

Short-term holders—defined as investors who purchased coins within the past 155 days—have seen their Realized Profit/Loss Ratio plummet to 0.07 since early Oct.

The metric indicates recent buyers are capitulating at a loss after heavy demand absorption during the second and third quarters of 2025, when long-term holders increased spending. The ratio last reached similar levels in the first quarter of 2022, though current market weakness has not been as prolonged.

Long-term holders, representing investors with holding periods exceeding 155 days, maintain a Realized Profit/Loss Ratio of 408 based on the seven-day exponential moving average. This means long-term holders are realizing profits 408 times greater than losses on average. The metric has declined sharply as BTC dropped but remains above levels seen in major bottom formations from the current cycle or the first quarter of 2022.

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Why It Matters: Bear Market Risk

Glassnode warned that if liquidity continues to fade and the long-term holder ratio compresses toward 10x or lower, the probability of transitioning into a deeper bear market becomes difficult to ignore. Short-term demand momentum has collapsed with liquidity evaporating, particularly after significant demand absorption earlier in the year.

The analytics firm noted that if the ratio remains depressed, market conditions could mirror those from the first quarter of 2022. Bitcoin traded around $91,200 at the time of the report, down 1% over the past week.

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