PnL indicators turn weak, the signal flare for Bitcoin capital inflows is extinguished

CryptoQuant’s CEO recently identified a notable change in the Bitcoin market. The realized market capitalization, which had been steadily rising for the past two and a half years, has recently leveled off, indicating that new capital is no longer actively flowing into the market. In particular, the complex signal known as the PnL indicator has begun to decline from its peak in mid-2025, revealing subtle shifts in market sentiment. Currently, Bitcoin is trading around $70,400, about 44% below its all-time high of $126,080 recorded in October 2025.

What the PnL Indicator Means and Its Market Implications

What is the PnL indicator? It is a composite metric that combines realized profit and loss, including the MVRV ratio, NUPL (Net Unrealized Profit/Loss), and the SOPR (Spent Output Profit Ratio) for short-term and long-term holders. Calculated as a 365-day moving average, this indicator provides a comprehensive view of the overall profit and loss status of Bitcoin investors.

From an on-chain data analysis perspective, an increase in realized market capitalization signals ongoing inflows of new funds into the market. Conversely, if realized market capitalization stagnates while total market cap declines, it suggests a lack of buying interest and insufficient selling pressure to offset the decline. The recent bearish turn in the PnL indicator is the clearest evidence of this slowdown in capital inflows.

On-Chain Data Reveals a Trend of Realized Losses

On-chain data clearly reflects complex market psychology numerically. According to Glassnode, long-term holders have realized a total profit of 3.27 million BTC since early 2024, surpassing the scale of the entire 2021 cycle. During this period, continuous inflows into spot ETFs and aggressive buying activity by large investors have absorbed much of this large-scale selling.

However, this profit-taking mechanism appears to be losing momentum recently. According to CryptoQuant’s own report, Bitcoin holders entered a net realized loss phase for the first time since October 2023. Since December 23, investors have realized losses totaling about 69,000 BTC, and the annual net realized profit has dropped sharply from 4.4 million BTC in October to around 2.5 million BTC. This level is similar to March 2022, reminiscent of that period’s market weakness.

No Forced Selling, but Expecting Range-Bound Trading

In the current situation, the likelihood of a sudden drop of over 70%, as seen in past cycles, is considered limited. It is difficult for extreme declines to occur until the spot holdings of institutions, totaling 712,647 BTC, are sold off. The average purchase price of these institutions is $76,037 per BTC, and despite current prices being in a loss zone, there is no forced liquidation pressure. Additionally, before Q3 2027, convertible bonds are not maturing, so immediate selling pressure at current levels is unlikely.

Therefore, this correction phase is more likely to be resolved through prolonged sideways trading within a range rather than a sharp rebound. Historically, when the PnL indicator has turned downward from similar highs, a pattern of several months of sideways movement has often preceded a clear directional trend.

Institutional Inflows Slow, But It Might Not Be Bearish

However, not all analysts agree that these signals are purely bearish. Sean Dawson, head of research at on-chain options platform Derive, suggests that the decline in net realized profits does not necessarily indicate a bearish outlook. In his view, this phenomenon could be the result of more sophisticated institutional investors and professional traders actively entering the market, naturally suppressing excessive volatility. This interpretation considers the market’s maturation process rather than a straightforward bearish signal.

Ultimately, the bearish turn of the PnL indicator and the weakening of capital inflow signals suggest that Bitcoin is entering a new phase. Until a clear trend emerges, close monitoring of institutional strategies and subtle on-chain data changes within the range-bound environment will be essential.