Murphy

The ETH data you wanted is here.....

Seems like it’s been a while since we talked about ETH. This round I only bought BTC and didn’t buy ETH—but that doesn’t mean I’m bearish on it. On the contrary, up to now, ETH remains the strongest mainstream asset in terms of consensus, second only to BTC.

This isn’t something I’m saying—it’s proven by the actions of ETH investors.

ETH’s current price ($1,900) is down -60% from its peak, which is significantly less than the -80% drawdown in the previous cycle.

But the holdings of the Conviction Buyers are already as high as 3,142w ETH, far exceeding the 1,950w枚 at the bottom of the last bear cycle—and it’s also a historical high.

This shows that no matter how many people FUD it on X, or even how aggressively they call it trash, it doesn’t affect that group of steadfast investors. When the price drops, they keep adding to their ETH.

At the same time, the total number of coins held by the Loss Sellers and Profit Takers is also clearly lower than at the bottom phases of the previous two cycles.

Whether they still have the willingness to keep selling or not, the amount of sellable supply left isn’t much anymore. Most of the coins aren’t even participating in turnover.

Finally, there’s a peculiar phenomenon we can’t ignore:

ETH’s Herfindahl index has already surpassed the level from the period when it first emerged in early 2015. This indicates that ETH’s token concentration is getting higher—certain large account clusters are monopolizing the supply.

This started in November 2024. Before that, ETH spent 9 years following a path of decentralizing and dispersing its holdings. Now, in the opposite direction, it has surpassed that benchmark in just 2 years.

So whether ETH in the next cycle will “cause trouble,” unleash extraordinary energy, or whether it will continue to stay soft and sluggish—honestly, it’s hard to say.

But based on the combined data, the bottom characteristics shown earlier at the $1,500 low were very clear. I remember that in the last cycle, ETH bottomed a full 5 months earlier than BTC. Maybe this time it will be similar?

Every BTC bought in 2025 is currently in a loss. So, as long as the 2025 cohort’s holdings have decreased, aside from wallet transfers, everything else has been sold off to cut losses.

As of today, there are still 4.77 million BTC in the 2025 cohort, down 41.5% from the peak in December last year.

The downtrend slope is clearly divided into two phases: before February it drops rapidly, and after February the decline slows somewhat, but it still maintains a certain slope.

This group should be the largest supply side in the market right now.

If we pull up the data for 2024, 2023, and 2022 for comparison, it’s not hard to see that these remaining holdings that are still in profit have basically already passed the steep part of the declining slope.

And the longer time goes on, the smaller the slope becomes. From the chart, the curve’s slope after February is almost flat like a straight line.

Even if the price drops further, the changes in the number of these holdings are not very noticeable. In other words, everything that needed to turn over has turned over, and the rest just stays put.

From the past two bear markets: at the bear-market bottom in 2022, the 2021 high-level holdings fell by 51%; at the bear-market bottom in 2018, the 2017 high-level holdings fell by 62%.

If we just look at it in a straightforward way, personally I think the bottom of this bear market would be no more than 50–60% (it’s currently 41%), and this doesn’t even account for the BTC bought via the 2025 ETF and by MicroStrategy, most of which is locked and not moving.

New metrics just dropped — the BTC Seller Exhaustion Index!

It measures both low volatility and high losses; when both conditions are met, the indicator triggers a signal.

First, the current state: the seller is already in the "extreme exhaustion zone" (the red area), and this is the first time this bearish cycle has entered that zone.

Looking at historical data, you can see that every previous bear market cycle had similar situations; sometimes more than once (labeled 1/2 in the chart).

When the current 1 appears, it may not be the absolute lowest point of the bear market, but it is definitely within the bottom range.

After that, if the price keeps ranging or goes even lower, but the index does not go any lower, I mark that as 2; across history, the confirmation of 2 is more reliable than 1.

However, the risk is that the price for 2 may still be higher than 1.

Based on the observations above, we can draw this conclusion:

If you’ve already entered a position, that’s not wrong; waiting for 2 to appear before building a position is also not wrong. But if 2 appears and you still don’t buy, then you’ll miss the entire bull market.

(ps: Don’t say I keep coming up with new indicators. It’s the Glassnode team that updates them frequently. I saw them and thought they might be useful, so I’m sharing them with everyone.)

The chip concentration has risen to 14.8%!

With one foot already stepping into the “high-risk zone.” Note! Here, risk does not refer to whether the market is going up or down, but to volatility.

Chip concentration cannot predict direction, but based on historical data, my friends and I have found a certain pattern:

When the curve starts to turn—if before this point BTC’s price was rising—then the probability of continued upward fluctuation is higher; conversely, if it was falling, then the probability of continued downward fluctuation is higher (as shown in the figure).

However, at this moment, the curve is still steadily rising. So, for now, we still can’t predict which direction is more likely to have the higher probability next.

But one thing is certain: risk is accumulating, and volatility is brewing......

The current market debate about the BTC bottom is all reflected in this chart. I think it’s quite representative, and it’s worth providing further explanation:

This chart places every day since 2015 into a two-dimensional coordinate system.

The horizontal axis is the profit ratio (PSIP), which measures whether the market is cheap or expensive; the vertical axis is the 1-month realized volatility, which measures whether the market is intense or calm.

The dashed lines divide the plane into four quadrants: cheap and volatile (upper left), cheap and calm (lower left), expensive and volatile (upper right), expensive and calm (lower right).

The red diamonds are the bottoms from the past three cycles. All of them fall in the upper-left quadrant—cheap and volatile.

That’s easy to understand: historical bottoms “force out” capitulation. Price suddenly breaks through the cost basis of a large number of holders, and panic selling amplifies volatility.

The orange dots are where we are now, and they fall in the lower-left half. This indicates that this cycle hasn’t seen concentrated capitulation; the supply is changing hands in a low-volatility environment. It digests the sell pressure through time and apathy—there’s no violent breakdown.

My personal take is:

Volatility contraction usually means the seller’s force is exhausted—those who wanted to sell have already sold, and the rest don’t move. A PSIP of 55% suggests the price is hovering near the cost basis of close to half the supply.

Low volatility + dense cost basis is a typical redistribution and bottoming structure.

This is a “boring bottom” pattern, not a “painful bottom” script.

But what I have to say is that volatility is mean-reverting. Long periods of compression are often a precursor to a volatility expansion, though the direction of the breakout is uncertain.

If, afterward, there is one downward volatility release, the orange dot would quickly move to the upper-left. Then it would become the kind of “standard bottom” with historical significance.

It tells us: the current market structure looks nothing like all historical bottoms! Either this is the first boring bottom, or real “capitulation” hasn’t happened yet.

Isn’t that exactly the disagreement the market has right now? Some people think it’s the former; others are waiting for the latter.

Since we’re no longer in the “upper-right” or “lower-right,” and I don’t want to bet on one direction only, putting odds evenly on both sides seems fine, right? 😀

Awesome! It’s really over 1 million.

Right now, that single price point of $63,000 has already accumulated to 1.15 million BTC—an extremely rare phenomenon even by historical standards.

Although a recent Coldcard hardware wallet vulnerability has forced some long-term holders to transfer their BTC.

But that’s absolutely not the main reason behind the explosive turnover of supply and demand around the 63k range.

Instead, it’s the result of long-term accumulation while BTC’s price has stayed at low volatility.

At the same time, the concentration of nearby coins has risen to 13.5%.

Coin supply can’t pile up indefinitely. Once the long/short battle reaches the critical point, someone’s going to win.

I’m increasingly looking forward to what happens next.....

This is really a bit strange! In the past two days, long-term holders (LTHs) suddenly transferred large amounts of funds.

For two straight days, there were 65,000+ BTC moving (excluding internal transfers within the same entity), causing the LTH net holdings to drop significantly.

As shown in Figure 2, starting in May, LTH net holdings began to change their previously steady upward pattern, and throughout July they have remained “stalled.”

And this is an extremely rare phenomenon in the past year.

Of that, nearly 14,000 BTC were transferred into exchanges. For example, a publicly listed company associated with Trump transferred 2,628 BTC into the Crypto.com exchange—this is part of it.

As for the other net selling by LTHs, where did it go, and what was the purpose—we simply don’t know.

Could it be that they know something and chose to head for safety early?

If I think about the macro risks that might exist—especially those that could affect BTC—what I can come up with is the following:

1⃣ The possibility of Federal Reserve rate hikes. This time it was a 9:3 split vote, the most dissenting votes since September 2016.

2⃣ The conflict in the Middle East and oil prices are the biggest inflation variables, and they are the upstream factor to item 1.

3⃣ The AI sector in U.S. stocks has highly concentrated valuations, and capital expenditures are becoming increasingly dependent on debt and private credit financing. If earnings disappoint expectations, borrowing costs rise, which could trigger systemic deleveraging.

4⃣ Positions in the Japanese yen carry trade have once again piled up into a one-sided net short position—crowded and nearing historical extreme levels.

Are there others? We’d also welcome everyone to add more.

Finally, the sensitivity of the current BTC on-chain supply structure itself may also, in an invisible way, amplify the potential risk points above.

--------------------------------

Of course, this doesn’t mean it must happen—these are only speculations based on the unusual behavior that LTHs have shown suddenly.

When something seems out of the ordinary, there must be a reason. In the near term, we should closely monitor changes in LTH behavior.

If large-scale distribution continues, it will inevitably put pressure on the market. If it’s only temporary and limited to a few isolated actions, then the impact won’t be significant.

As people in the crypto world, we all know that BTC has the best liquidity and the strongest consensus. But the deepest asset consensus hasn’t translated into usage efficiency that matches its scale.

Why is that? Because the BTC mainnet itself doesn’t have a smart-contract environment like Ethereum does.

To make BTC earn yield on-chain or to use it as collateral, you first have to wrap it into WBTC and go through a cross-chain bridge; or else hand the coins over to a custodian. In any case, most holders can’t really accept that.

At least I can’t accept it—Not your keys, not your coins......

So, what @BabylonLabs_io’s Trustless Bitcoin Vaults (TBV, trustless Bitcoin vaults) is here to solve is exactly this problem.

Actually, its mechanism is easy to understand:

1) Keep BTC on the Bitcoin mainnet and lock it in a script that’s jointly signed when the vault is created.
2) Sign the legitimate spend path from the beginning, so nobody can later conjure up a new spending method out of thin air.
3) Then use Ethereum contracts to track this vault, and let the connected DeFi apps treat it as collateral.
4) When redeeming, use existing Script opcodes to verify the redemption proof on the Ethereum side.

That way, “trust” shifts away from whether a custodian is reliable, to cryptography and the two public chains—Bitcoin and Ethereum.

Today, TBV’s first application scenario chooses Aave v4, a mature liquidity market. Looking at the market, this should be the first truly “native + trustless” BTC lending solution.

From then on, BTC holders won’t have to choose only between “keeping holding” and “selling to get liquidity.” This could help change the awkward situation where 99% of BTC is currently still sitting outside DeFi.

That said, I think lending might just be the first step. If in the future stablecoins, credit cards, derivatives, and even insurance can all be built around native BTC collateral, then that’s where the bigger imagination really lies.

#baby $BABY

After the data share on the chip structure yesterday, many friends sent me private messages asking: Based on other data, is the probability higher for upward fluctuations or downward ones?

Honestly, it’s hard for me to answer this question while fully ruling out personal bias.

In the posts from the past few days, we also discussed that, from the logic of “the break-even point acts as support/resistance in bull/bear cycles,” the probability of downward movement on smaller timeframes is higher. This also includes scenarios like a false breakout upward followed by a drop downward.

But on larger timeframes, the process of trend change is slow—though it won’t be changed.

Maybe two years from now, when we look back, a lot of the current guesses,纠结, and even worries will turn out to be unnecessary.

Just like the Black Swan event in November 2022: as the price fell, panic selling accelerated, clearing out supply and bringing the bear market to an end.

However, it’s also possible that I personally hope to achieve the “final drop.”

That way, there’s a chance to lower the average cost and then ride the trend to fully load the position—so the above is also difficult to guarantee as absolutely objective insight.

But I know that whether or not there is a “final drop,” we are, for the most part, now at the bottom or close to it, not at the top or somewhere midway on the slope. That’s the scope of my understanding.

Here’s an example from the data:

As the market becomes more mature, the share of total circulating supply held by LTH gradually increases over time. Once they collectively surrender, the dominance of inflows into exchanges should be stronger than in the earlier stages.

So when the proportion of “realized losses when LTH transfer to exchanges” exceeds the previous cycle’s peak level, it often occurs in the relatively bottom region of the current cycle.

Looking back to February again: although the price is pretty similar to now, the figures then were far apart. So February’s BTC was close to the current one in terms of space, but not in terms of time.

And after July, the situation will be different. More and more bottom conditions across different dimensions should gradually start to appear.

Let’s wait and see......

My precious little cutie, I haven’t looked at the chip structure for a few days, and when I refresh the data, I get quite a shock.

On URPD, there’s a towering candle at the $63,000 level—up to today, it has already accumulated as many as 890,000 BTC.

As far as I remember, in a single price level with such intense long-versus-short battles, this should be the first time since the end of 2025.

If it weren’t for Coinbase locking 550,000 coins in the $83,000–$84,000 range, then $63,000 would probably already be well over 1,000,000 BTC right now.

What does 1,000,000 coins mean? That’s 5% of total circulating supply. Historically, once it reaches a size beyond that, there has basically been at least one major shock.

Because the short-term chips are too concentrated, price sensitivity increases.

At the end of October 2022, right before the FTX collapse, there were already 1,000,000 BTC at around $19,000, and another 870,000 BTC at $18,000. Together, those two levels accounted for 9.7% of total circulating supply.

Then what happened next is something everyone knows—an event as the fuse, layered on top of the fragility of the chip structure, triggered huge volatility.

And now, the $62,000 and $63,000 levels combined have already reached 8%.......

(By the way, today the chip concentration is already 13%, entering the warning zone; it’s only one step away from 15%.)

Come on—give it a decisive one! 🤣🤣🤣

“On-chain data” and “technical indicators” are two completely different dimensions — the former is based on UTXO as its algorithm, while the latter is built on volume and price — yet in many cases, they resonate with each other.

Maybe it’s different paths leading to the same place: when it’s “the right time,” they will, quite unintentionally, point to the same outcome.

For example, in our tweet on July 29, we mentioned that the BTC realized net profit/loss curve hit two extreme negative values in February and June, and at the higher time scale it diverged from price (see the excerpt).

This is a signal of “seller exhaustion, net losses converging” interpreted from on-chain behavior. And at the same time, technical indicators also show a similar kind of guidance.

The CCI indicator used for trend tracking shows a weekly-level oversold signal (red dots). In the past 5 years, this signal has appeared a total of 4 times: November 2018, March 2020, June 2022, and November 2025.

And while an oversold signal only indicates the intensity “at that moment,” what truly deserves attention is the subsequent sustained convergence of the curve and its divergence from price.

In addition, if later on you also see a signal like “downside impulse depletion,” that would indicate that the bearish momentum is being gradually absorbed.

I interpret this as the lead-up process for a trend shift; although slow, the direction is clear.

By combining “on-chain data” with “technical indicators,” the conclusion is:

1⃣ The major-scale downtrend is almost at an end — this can be confirmed.

2⃣ What remains uncertain is only whether there will be another “black swan” like in Nov 2022; but that would just be another confirmation of the ongoing CCI divergence.

3⃣ Betting the whole position on a black swan’s “final drop” is irrational — this isn’t trading, it’s gambling.

4⃣ At this point, there’s no reason to be overly bearish anymore. Time won’t stand on the side of the bears.

In a bull market, the main line is “realizing profits.” Therefore, when the indicators return to break-even (the zero axis), it becomes the support point. When sellers clear the market, it’s easier to form a stage bottom.

In a bear market, the main line is “realizing losses”—the exact opposite of a bull market. When the market reaches break-even, it becomes a pressure point. It’s better to act early; a stage top is easier to form.

And currently, BTC is at the net break-even point.

Based on the logic above, if we only look at smaller timeframes, the probability of “going down” is definitely higher than the probability of “going up” (including after a “fake breakout” followed by a drop).

But if we look from a higher dimension, we can interpret another layer of information:

In the two negative periods in February and June, the pattern is “higher highs, then lower highs.” When prices are lower, net losses are not amplified continuously—creating a divergence with price.

This implies that the preliminary process of a trend reversal is being slowly and quietly incubated.

Even if there is another drop, as long as net losses fall below the previous low again, then on a larger timeframe it can be nearly confirmed that the probability of “going up” will be greater than the probability of “going down.”

Just remember: historically, the end result of sustained divergence is when everything is decided in one decisive move.

This is data that excites all “cycle traders”

As of July 2026, the holdings size of the believers buyers (CB) has reached 4.02 million BTC; this figure is already far beyond the peak of the previous bear market bottom at 3.46 million BTC.

This means that although a large amount of ancient coins within the cycle are waking up and cashing out, more coins are being taken away by the believers buyers as well—especially when prices fall.

Despite the fact that BTC has been criticized by bearish investors, including: the bull-market multiples are not high, the risk-reward ratio isn’t attractive, expectations that it will drop to 40k, 30k, and so on;

none of this can shake the believers buyers’ confidence and pace.

Every time I see the CB holdings hitting a new high, I know we’re one step closer to “spring.”

Big, maybe it’s coming again......

In history, there have been many instances where, after IV falls below 40%, “large fluctuations” in the market followed. The logic behind this was explained in detail in our May 11 tweet (see the excerpt).

👉A simple summary of the 3 points:
1、Low IV means there is a very high consensus on volatility, so upside-down surprise events are more likely to be amplified.
2、Low IV attracts volatility-arbitrage positions; when the short side closes, it can further amplify volatility.
3、As market makers accumulate more short gamma, once a breakout happens, their trend-following hedging can further amplify volatility.

🚩A few cases from the past year:
1、At the start of January, 15 days after IV fell below 40%, BTC dropped from 9.7w to 6.2w;
2、In late April, 14 days after IV fell below 40%, BTC dropped from 8.2w to 6w;
*(i.e., the one I reminded about in my May 11 post)*
3、After June 15, BTC fell from 6.6w to 5.8w;

Of course, after low IV, not every time will necessarily lead to a “downward” type of volatility. For example, in June 2025, 9 days after IV fell below 40%, what followed was an “upward” volatility move ranging from 10.1–11.9w.

So IV is not about predicting “direction,” but predicting “magnitude.”

Now, looking back at the current situation: 1 week is 33%, 1 month is 34%—both are below 40%; so the probability of “volatility” being triggered by market reflexivity and trading rules is rising.

Spot traders don’t really have anything to do with it—futures traders, please fasten your seatbelts!

Judging from Binance’s net transfer data, the current market sentiment is split and disagreement is severe. Two whale cohorts have been operating in opposite directions for a long time.

Group A: individual transfer size greater than 10M, mainly transfers in;
Group B: individual transfer size between 1–10M, mainly transfers out.

These two forces counterbalance each other, resulting in severe disagreement. When Group A is stronger, the BTC price tends to weaken; when Group B is stronger, the price stabilizes (or rebounds).

And currently, Group B holds a slight advantage, so the weak rebound logic can be supported.

At the same time, the BTC balance on exchanges has remained at a relatively high level from 7/13 to 7/15, with no clear decline.

This is completely different from the strong rebound path during 2/25–3/6, when the balance dropped significantly.

From this alone, it’s not hard to see that overall demand is not strong— or that the demand side has not gained a decisive advantage over the supply side.

This situation affects cycle traders not much, but for short-term traders it’s hell-level difficulty: it can easily lead to a situation where both longs and shorts get squeezed, which isn’t suitable for ordinary investors.

PSIP is affected by different cyclical chip characteristics and structure, including the accumulation of low-price chips and an increase in lost chips, causing the lows to be continuously raised.

In this cycle, when BTC fell to $58,000, PSIP had dropped to 46%. This value is infinitely close to the low of the previous cycle.

Based on the current structure, if BTC drops to 4w, PSIP would be: 39%; if BTC drops to 3w, PSIP would be: 36%. This would not only be far below the previous cycle, but even lower than in 2015.

Personally, I think this possibility is very small—very, very small......