Intense capitulation: 8M BTC and most ETH supply underwater, XRP loss-trend deepens
Crypto sentiment is turning heavily bearish amid “intense capitulation”, with on-chain data showing widespread unrealized losses. Glassnode reported that over 8 million BTC are currently underwater, framing the selloff as a “market reset” at scale. For Ethereum, the share of supply sitting on more than 3x profit has fallen to 11%—the lowest reading since February 2017—down sharply versus prior cycles, where the comparable cohort exceeded 50% at peak. In 2026, BTC and ETH are both down materially (about -31% and -46% respectively, per CoinGecko).
XRP also signals capitulation dynamics. Glassnode’s 90D-SMA Realized Profit to Loss Ratio has dropped to 0.38, meaning only 38 cents of profit are being realized for every $1 of losses. At the 2025 peak the ratio was ~50, indicating loss-selling has overtaken profit-taking. Bitget CEO Gracy Chen said such periods typically coincide with lower sentiment and greater caution, with unrealized losses pushing investors to reassess risk and portfolio positioning rather than react to short-term moves. For XRP, the 90D-SMA of total fees fell about 91.5% since Feb 2025, suggesting a near contraction in organic transaction demand.
While some traders view capitulation as a setup for future winners once liquidity returns, experts cited in the article do not believe the bottom is in yet. The near-term implication is a still-fragile market where rallies may face supply pressure, but the longer-term angle may favor capital rotation toward cash-flow and usage-focused protocols.
Bearish
The core signal is that “intense capitulation” is not just price action—it’s showing up in realized/unrealized positioning. With 8M+ BTC underwater and ETH’s profitability profile compressing to the lowest since 2017, supply pressure from loss holders typically limits upside follow-through. XRP’s profit-to-loss ratio at 0.38 and the 91.5% fee contraction add evidence that sellers are still in control and organic activity is shrinking.
For short-term trading, this often means rallies can be met by continued distribution, and volatility can stay elevated until liquidity stabilizes. Historically, capitulation phases can bottom after liquidity returns and forced selling exhausts (seen in prior multi-week washouts), but this article’s indicators suggest that exhaustion has not clearly arrived yet. For the long term, the “reset” narrative supports a later rotation toward revenue/usage-focused protocols once risk sentiment improves—yet the timing remains uncertain, so bearish bias is warranted until profitability and network activity metrics stop deteriorating.