Is Bitcoin’s ‘supercycle’ still on the table as on-chain metrics flash red?
Bitcoin is once again testing investors’ nerves. After briefly pushing to fresh highs and flirting with six-figure territory, the market has pulled back sharply, dragging a large chunk of recent buyers into unrealized losses and reigniting the debate: is a long-awaited “supercycle” still plausible, or is this just another setup for a deeper correction?
Over the past ten days, a significant group of market participants has slipped underwater as Bitcoin and other major large-cap assets failed to hold critical resistance levels. Traders who entered near the local top are now nursing paper losses, and short-term sentiment has soured accordingly.
Bitcoin [BTC] itself has followed this pattern. Just days ago, the asset notched its second-highest all-time level, decisively breaking above 95,000 dollars. Momentum carried it toward the 97,000-dollar region before the rally lost steam. The subsequent pullback left multiple investor cohorts — particularly late buyers and high-leverage traders — sitting on unrealized red positions.
With price momentum cooling, the key question becomes: what could restore the conviction to HODL through volatility and potentially drive the next leg up?
Macro headwinds and weakening institutional demand
The current macroeconomic landscape is not lending much support. Heightened global uncertainty and cross-asset volatility are prompting many investors to shift capital toward perceived safe havens, often at the expense of risk assets like Bitcoin. This broad risk-off tone has been reflected in institutional flows.
Spot Bitcoin exchange-traded products, which previously acted as a powerful demand engine, have recently seen nearly 1.8 billion dollars in net outflows in less than a week. That reversal signals that at least part of the institutional bid that fueled earlier rallies is now stepping back, taking profits, or de-risking ahead of potential macro shocks.
At the same time, a prominent corporate holder has been signaling caution. GameStop’s on-chain wallets recently transferred all of their Bitcoin holdings to a major institutional exchange platform. Given the structure of its Bitcoin balance sheet, this move is widely interpreted as positioning for possible liquidation rather than mere custody reshuffling.
Back in mid-May 2025, the company accumulated 4,710 BTC at an average entry of around 107,000 dollars per coin, deploying approximately 504 million dollars. With Bitcoin now trading near the 90,000-dollar mark, that position is sitting on a sizeable unrealized loss. If those coins are indeed sold, the firm may lock in roughly 76 million dollars in realized losses at current prices.
This combination of ETF outflows, potential corporate selling, and macro fear has made it considerably harder to argue that investor conviction is robust in the short term.
A fragile HODL culture under pressure
The HODL narrative — the idea of holding Bitcoin through any drawdown in expectation of outsized long-term gains — is being stress-tested once more. Long-term holders with deep conviction are used to dramatic swings, but newer entrants, particularly those who bought near recent highs, may not be as resilient.
A weakening institutional bid and deteriorating risk appetite tend to accelerate that psychological pressure. When large, visible players appear to be tapping out or reducing exposure, retail participants may interpret this as a sign that the cycle has peaked. This, in turn, can spark a feedback loop of selling into weakness, amplifying volatility.
Despite this, the public narrative from some major market participants remains strikingly optimistic. While on-chain data warns of growing downside pressure, several high-profile voices are promoting the idea that Bitcoin is not just in a typical bull market, but in a potential “supercycle” — a structurally stronger, longer-lasting uptrend that supposedly changes the traditional boom-and-bust pattern.
The supercycle thesis: what are the bulls seeing?
For 2026, projections from prominent crypto-focused funds depict a highly ambitious outlook, with one notable scenario clustering around an average year-end target of roughly 215,000 dollars per Bitcoin. In parallel, influential industry figures such as the founder of a leading global exchange have recently reiterated their long-term bullish stance, explicitly endorsing the possibility of a supercycle despite near-term turbulence.
These forecasts raise an obvious question: if on-chain and macro signals are turning increasingly cautious, what exactly are these optimists betting on?
The supercycle thesis generally rests on a few key assumptions:
1. Structural institutional adoption: The idea that pension funds, sovereign wealth funds, and large corporations will gradually allocate a non-trivial percentage of their portfolios to Bitcoin, creating a persistent demand base rather than short-lived speculative flows.
2. Macro regime shift: Expectations that ongoing monetary debasement, sovereign debt concerns, and currency instability will push more capital toward scarce digital assets.
3. Maturation of market infrastructure: Belief that regulatory clarity, improved custody solutions, and financial products such as ETFs and derivatives will reduce perceived risk and unlock new pools of capital.
4. Network and brand effect: The notion that Bitcoin’s status as the “digital gold” of the crypto world is self-reinforcing, attracting capital simply because it is already the dominant asset.
These long-term themes may indeed justify bullishness over multi-year horizons. However, they do not automatically negate shorter-term downside risk — especially when current metrics and price behavior are flashing caution.
On-chain signals flash red
On-chain data currently presents a more sobering picture. A key indicator, Net Realized Profit/Loss (NRPL), has turned negative, showing that, on aggregate, investors are beginning to realize losses rather than profits. Historically, such transitions often align with phases where downward pressure builds and corrections deepen, as traders capitulate or rebalance.
In past cycles, periods of significant realized loss have occasionally marked the beginning of a broader, more sustained drawdown, especially when they coincide with macro uncertainty and falling liquidity. While no single metric can predict the future, a red NRPL tends to signal that bullish momentum is fading and that the path of least resistance may be lower in the short term.
This shift is putting the 85,000-dollar support region into the spotlight. That level is now under strain from several converging forces: institutional selling, ETF redemptions, corporate de-risking, and increasingly fragile investor psychology.
As leverage returns to the futures and derivatives markets, the stakes grow higher. Elevated leverage means that relatively modest price moves can trigger a cascade of forced liquidations, abruptly accelerating the trend in whichever direction the market breaks.
Divergence between data and narrative
The growing gap between the optimistic supercycle narrative and the more cautious signals from on-chain and macro data is becoming hard to ignore. While long-term forecasts promise six-figure prices and beyond, the current environment is characterized by:
– Weakening institutional demand in regulated vehicles
– Corporate treasuries stepping back from aggressive Bitcoin strategies
– Rising realized losses and softening on-chain activity
– Heightened macro uncertainty and risk-off behavior across global markets
This divergence suggests that some of the most bullish projections may be driven less by current fundamentals and more by expectations tied to external developments: the potential impact of upcoming legislation on digital assets, price distortions in commodities and metals, and shifting trade dynamics following major tariff decisions by global powers.
When narratives run far ahead of the data, markets can become fertile ground for speculative capital. That speculative bid can indeed drive sharp rallies — but it also raises the probability of liquidation traps, where overleveraged traders are lured in by euphoric price action only to be wiped out by sudden downside reversals.
Could this be a liquidation trap in the making?
With leverage creeping higher and spot demand softening, the setup for a classic liquidation event is in place. If prices grind upward just enough to convince sidelined capital that the supercycle is “back on,” a wave of late long positions could pile in at elevated levels.
If that rally then meets strong selling from institutions or long-term holders taking profits, it may reverse abruptly. As price slips below key support zones, leveraged positions begin to liquidate automatically, pushing prices further down in a cascading loop. The result is a rapid and painful flush that clears out excess leverage and resets the market.
In such environments, the line between a healthy correction and a severe shakeout becomes thin. Bulls see pullbacks as buying opportunities within a larger uptrend, while bears interpret them as the early stages of a broader top formation. Whether this resolves into a renewed leg higher or a more protracted downtrend will likely depend on how flows and sentiment evolve around key price levels.
What would need to happen for a true supercycle to remain plausible?
For the supercycle thesis to stay credible — rather than devolve into pure marketing rhetoric — several developments would need to materialize or reassert themselves:
1. Renewed, sustainable spot demand
ETF outflows would need to stabilize and eventually reverse, indicating that institutional and high-net-worth investors are once again accumulating rather than distributing. Fresh inflows from new jurisdictions or newly approved products could play a crucial role.
2. Stability in corporate treasuries
High-profile corporate holders would ideally stop selling into weakness and instead either hold or add on dips. Visible treasury accumulation tends to strengthen the HODL narrative and reassure retail investors that major players are aligned with a long-term view.
3. Improvement in on-chain health
On-chain activity — including transaction volumes, growth in active addresses, and realized profit/loss profiles — would need to show signs of a constructive reset rather than ongoing stress. Rising realized profits following a washout period often signal the foundation of a new leg higher.
4. Macro environment turning supportive
A shift from extreme risk-off behavior to a more neutral or risk-on climate would likely be necessary. Stabilization in rates, clearer policy direction, or easing geopolitical tensions could free up risk capital.
5. Moderation of leverage
A genuine supercycle is more plausible when upward moves are driven primarily by spot demand and long-term allocation rather than extreme leverage. A flush of excess leverage followed by a more organic grind higher would be a healthier pattern than a purely speculative melt-up.
If these elements begin to align, the case for a structurally extended bull phase becomes far stronger than it appears today.
How investors might navigate the current backdrop
In the face of conflicting signals — bullish long-term narratives versus cautious short-term data — investors are forced to reassess their time horizons and risk management strategies.
– Short-term traders may focus on on-chain metrics, derivatives positioning, and macro news, treating current conditions as a high-volatility environment where both breakdowns and sharp short-covering rallies are possible.
– Medium-term participants might watch levels like 85,000 and 90,000 dollars as key zones of interest. Sustained closes below support areas could signal that a deeper correction is unfolding, while reclaiming and holding them with improving flows could suggest that the pullback was a temporary reset.
– Long-term holders who believe in the multi-year supercycle concept may view drawdowns as an inevitable feature rather than a bug of Bitcoin’s price dynamics. However, even they may reconsider aggressive leverage or concentrated positions, opting instead for gradual accumulation and diversification.
Risk management becomes paramount when the market is caught between compelling narratives and uncomfortable data. Position sizing, avoidance of excessive leverage, and clear invalidation levels can make the difference between surviving a shakeout and being forced out at the worst possible moment.
Supercycle or standard cycle?
The current state of Bitcoin can be summarized as a clash between hopeful long-term visions and increasingly cautious real-time indicators. On one side stand those who see every pullback as a stepping stone toward a historic supercycle, reinforced by adoption trends and macro tailwinds that may unfold over years. On the other side lies a growing body of evidence that the market is overheated in pockets, vulnerable to liquidation cascades, and increasingly sensitive to macro shocks.
It is entirely possible that both perspectives contain elements of truth: Bitcoin may still be in a multi-year secular uptrend, yet face substantial, painful corrections along the way that look and feel like the end of the world to those overexposed at the top.
For now, Bitcoin’s ability to hold critical support levels in the face of institutional selling, ETF outflows, and souring sentiment will be crucial. If the asset can absorb this pressure and reestablish momentum on the back of genuine spot demand, the supercycle thesis will regain credibility. If not, the current optimism may be remembered as another chapter in Bitcoin’s long history of boom-and-bust cycles, rather than the start of something fundamentally new.
Important note
All information above is for educational and informational purposes only and should not be taken as financial or investment advice. Digital assets are highly volatile and speculative. Anyone considering trading, buying, or selling cryptocurrencies should carefully assess their own risk tolerance and conduct thorough independent research before making any decisions.