Want Another Bull Market? Bitcoin Needs Trillions in New Capital to Enter

More and more capital is being invested, but the market's gains are becoming increasingly limited.

Written by: Ashrith Rao

Compiled by: Luffy, Foresight News

Since Bitcoin reached its historical high of $126,000 in October 2025, it has experienced a cumulative decline of 50%, with the current price hovering around $63,000.

Recently, three on-chain data reports have been released, revealing essential structural differences between this downturn and previous bear market corrections, which cannot be summarized by a simple price chart.

The issue of capital efficiency has become a long-term reality, difficult to reverse in the short term.

On July 1, CryptoQuant CEO Ki Young Ju released an in-depth report that thoroughly reviewed the capital pull efficiency of Bitcoin across various cycles, overturning the market's perception that "Bitcoin still has tenfold growth potential." The study compared the capital required for equivalent gains in each bull market, showing significant disparities:

• In 2011, only $2.7 billion in net inflows led to an astonishing 55,436% increase;
• From 2018 to 2021, $36.5 billion in new capital drove about a 2000% increase;
• In the current cycle, a staggering $69.7 billion in market cap increase has only resulted in a 689% increase.

In 2011, only $5 million in new capital was needed to double the price; today, achieving the same doubling would require an estimated $101 billion in new capital. This is not a trivial matter, and we must reassess Bitcoin's growth logic. In earlier years, millions in capital could drive market movements, but now it requires hundreds of billions from institutional funds to push the market into a trending phase.

Ki Young Ju's calculations are quite severe: for Bitcoin to experience another linear surge in its main upward wave, at least $1 trillion in new capital is needed. This means Bitcoin can no longer rely solely on retail ETF small funds for speculation; it must become a core component of global asset allocation.

Comparing Bitcoin's current market cap of $1.3 trillion to gold's total market cap of $27 trillion, there is plenty of theoretical growth space. However, the significant decline in capital pull efficiency has led to a much slower pace of increase compared to the bull markets of 2017 and 2021, making it increasingly difficult to replicate past hundredfold or tenfold increases.

Even if future inflows reach historical highs, data patterns indicate that the percentage increase in subsequent bull markets will be significantly lower than in previous cycles. CryptoQuant's latest calculations have already proven that Bitcoin is unlikely to replicate the exaggerated increases seen in 2017.

The continuous depletion of circulating chips has both advantages and disadvantages.

The structural changes on the supply side of Bitcoin have an impact on the current market that even surpasses the logic of capital efficiency. K33 Research Institute's report released on June 15 shows that the proportion of long-term holders' holdings has reached a historical high of 79% of the total circulating supply.

Additionally, as of June 6, only 218,421 Bitcoins that had been dormant for over two years were transferred on-chain, marking the lowest level since June 2012, when only 70,600 dormant Bitcoins moved. In comparison, during the chip distribution phase in June 2024, 1.18 million Bitcoins were transferred from cold wallets for sale.

Data from the on-chain tracking platform Alphractal also supports this trend: the proportion of long-term holders' holdings has increased from 74% in the previous cycle to the current 78%; in recent months, about 830,000 Bitcoins have moved from short-term trading wallets to long-term dormant addresses.

K33 analyst Vetle Lunde stated that the high concentration of holdings, the minimal movement of dormant coins, and the continuous shrinkage of trading volume do not indicate the emergence of new selling forces but rather are typical market characteristics in the later stages of a Bitcoin bear market. The logic is quite straightforward: over 80% of Bitcoins are locked up long-term, significantly reducing the available floating chips for trading in the market. The depth of the order book has thinned, making it easier for incremental buying from institutions, retail investors, or ETFs to quickly drive price fluctuations.

Looking solely at liquidity structure, market sentiment is optimistic, but it cannot determine whether new capital will enter as expected.

Institutions such as Bitfinex, Wintermute, and Glassnode have repeatedly emphasized that ETF capital inflows, the expansion of stablecoin scales, and institutional investment enthusiasm have not yet reached levels capable of supporting a long-term reversal. Tightening on the supply side is an important condition for bottoming out, but relying solely on chip scarcity is insufficient to confirm that the market has bottomed.

Data from CoinDesk in late June showed that the total holdings of long-term holders at a loss reached 5.58 million Bitcoins, the second-highest in history, only behind the sharp decline in March 2020. Interestingly, even with a large number of long-term holders deeply trapped, the proportion of long-term holdings continues to rise, indicating the simultaneous presence of both steadfast holding and painful selling emotions in the market.

Profit and loss indicator signals: Fourth time reaching extreme bottom range since 2022.

On July 3, CryptoQuant released several on-chain indicators, among which the realized profit and loss ratio is the most critical.

Bitcoin's overall realized profit and loss ratio has dropped to -0.35, reaching a 43-month low, comparable to the deep bear market following the FTX collapse in 2022, when the price fell below $16,000.

Historical data shows that when this indicator falls below -0.35, both the 2015 and 2019 bear markets experienced large-scale reversal bull markets. This indicator reflects the distribution of realized profits and losses across all tokens on the network, intuitively showing that the market is in a state of overall loss. A negative value indicates that large-scale stop-loss selling pressure has been fully released, rather than an impending risk of decline.

Interpreting the market context, on July 1, Bitcoin dipped to a low of $57,950, the lowest point in 652 days; it then rebounded by 7%, currently oscillating in the $61,000 to $63,000 range. Swan Bitcoin analyst Adam Livingston pointed out that the current price is only 16% higher than the network's realized average price; historically, such price differences have led to an average increase of 41% over six months and 81% over a year.

Bitwise Chief Investment Officer Matt Hougan recently discussed the redemption turmoil of MicroStrategy's STRC preferred shares: in June, the stock fell below its $100 par value, hitting a low of $75, leading the market to question the long-term sustainability of Saylor's business model of accumulating coins through issuing shares and distributing dividends. However, Hougan believes that this risk clearing has helped the market eliminate a large number of weak speculative positions, rather than signaling a new round of systemic risk.

The market is currently testing key support levels repeatedly. This year, Bitcoin has tested the $60,000 mark four times, maintaining support each time; whenever concentrated selling pressure is released, centralized exchanges have seen a net inflow of about 50,000 BTC daily, reflecting a gradual exhaustion of selling pressure rather than large-scale forced selling. From the daily and weekly candlestick patterns, the market is forming a W-bottom reversal structure.

Analyst John Bollinger stated that the current price is testing the lower Bollinger band, with small fractal bottoming patterns appearing within the larger cycle. If the $60,000 support is effectively broken, the next key support level will fall within the $53,000 realized price range, which is also the core area that bottom-fishing capital must defend.

Macroeconomic environment suppresses market conditions.

All changes in on-chain chips and capital are established against a bearish macro backdrop. In June, the U.S. spot Bitcoin ETF experienced its worst monthly performance since its launch, with BlackRock's IBIT redemption scale leading the industry, resulting in a net outflow of over $4.5 billion from the entire market. K33 data shows that the redemption speed has slowed, but capital has not shifted to net inflows.

The change in the Federal Reserve chair brings significant policy uncertainty, and the market is re-evaluating policy expectations under Kevin Warsh's leadership of the Federal Reserve, with interest rate trends being a core variable affecting Bitcoin's short-term market conditions. June's U.S. employment data fell short of expectations, with only 57,000 new jobs added, far below the market's expectation of over 100,000, leading to a slight increase in interest rate cut expectations.

European institutions are gradually improving their supporting infrastructure. Germany's DZ Bank has launched Bitcoin trading and custody services in accordance with the EU's MiCA regulations, and Deka Bank plans to cover 340 savings banks in Germany with similar products. Institutional infrastructure is slowly but steadily developing in the periphery.

However, these are more demand-driven factors rather than catalysts for capital flow.

Summary

Considering all signals, if future economic growth becomes a reality, then to achieve percentage growth comparable to previous cycles, the required institutional capital will far exceed that of previous cycles due to declining capital efficiency.

With the concentration of long-term holders reaching a historical high, the market's available floating chips to absorb this capital have significantly reduced.

The large-scale stop-loss selling pressure has basically been cleared, as the profit and loss indicators are at their lowest level in 43 months.

Single data points can only reflect local market characteristics; when all indicators are combined, the market has already established complete bottoming conditions, but the decisive variable—large-scale institutional incremental capital—has yet to materialize.