Bitcoin rebounds to $65,500, but on-chain data reveals that the market still shows signs of fatigue

Bitcoin prices experienced a short-term sell-off and rebounded technically from the $62,500 level on February 25. According to Gate market data, as of February 25, 2026, Bitcoin (BTC) is priced at $65,481.8, with a 24-hour change of +3.94%, successfully reclaiming the $65,000 threshold. Despite signs of a rebound, deeper analysis of on-chain data reveals persistent weakness in market structure, which may limit further upward potential.

On-Chain Indicators Reveal Deep Market Structure

Although Bitcoin’s price saw positive intraday movement, several core on-chain indicators did not improve accordingly, instead signaling that the market may be entering a prolonged defensive phase.

First, the realized profit and loss ratio, which measures overall market profitability, has issued a historic signal. The 90-day simple moving average (90D-SMA) of this indicator has fallen below 1, indicating the market is currently in an overextended loss realization phase, meaning the total realized losses from selling have exceeded profits. Historically, when this indicator drops below 1, the market often takes six months or longer to recover. Only when it rises back above 1 does liquidity typically begin to meaningfully return to the crypto market.

Bitcoin Realized Profit and Loss Ratio. Source: Glassnode

Meanwhile, Bitcoin’s realized market cap has also shrunk significantly. This metric is calculated based on the last on-chain movement price per coin and reflects the total capital flowing into the network. Data shows it has fallen from a high of $1.12 trillion in November 2025 to about $1.09 trillion now, indicating roughly $33 billion in network capital has exited in less than three months. The continued decline in realized market cap further confirms low willingness for new funds to enter.

Changes in Holdings and Market Defensive Posture

From a micro perspective of holder structure, market participants’ behavior also indicates a defensive stance. On-chain data shows that large addresses holding between 1,000 and 10,000 BTC have been steadily reducing their holdings over the past 12 days. Their share of supply has decreased from 21.7% to 21.2%, roughly 90,000 BTC, worth about $5.8 billion at current prices. Although the pace of reduction is moderate, this large-holder-led redistribution of supply creates ongoing selling pressure during rebounds, limiting upside potential.

Bitcoin Supply Distribution. Source: Glassnode

Additionally, HODL Waves data shows that the supply of coins held for 3 to 6 months has risen to 25.9%, making it the largest holding group. Most of these coins were accumulated near the market highs at the end of 2025 and are currently at a loss. This structure implies that these trapped holders are forced to hold long-term, while the market lacks new active capital to absorb supply above. Analysts generally believe that, with these trapped positions locked and insufficient new inflows, the market is likely to remain in a defensive mode.

Technical Levels and Market Sentiment

From price action, Bitcoin rebounded quickly after falling to the $62,525 support level, indicating short-term buying interest in that zone. However, daily technical patterns still face tests. A previous triangle breakdown suggested potential downside correction space.

Currently, market sentiment is in a delicate balance. Despite the rebound, derivatives indicators such as funding rates remain bearish, showing market participants are cautious about the sustainability of the bounce. In the short term, if macro unfavorable factors continue to develop, Bitcoin may test the $62,500 support again. If that level is broken, the next psychological support is around $60,000. Conversely, if buying interest persists and pushes the price above resistance near $67,394, it could temporarily reverse the short-term weakness.

Bitcoin Price Analysis. Data Source: TradingView

Overall, Bitcoin’s current price rebound shows a clear disconnect from on-chain fundamentals. Until the realized profit and loss ratio recovers, capital flows back into the market, and large holders slow their selling, the overall recovery remains fragile.

Summary

Although Bitcoin has rebounded from the $62,500 support to above $65,500 in the short term, on-chain data indicates that the underlying market structure remains weak. The realized profit and loss ratio has fallen below 1, signaling a loss-dominated phase, which historically is associated with months of low liquidity. Meanwhile, large addresses continue to reduce holdings, with about 90,000 BTC sold in the past 12 days, adding selling pressure to the rebound. Until capital inflows resume and on-chain indicators improve, the market’s overall foundation for recovery remains limited, and future movements may continue to be choppy or defensive.