On-chain analysis week 35/2026: Bitcoin enters the sprint race.

Analyst Research Team

Group On-chain HCCVenture

Market Summary

Following a sharp correction in the first half of 2026, Bitcoin recovered from the $60,000-$65,000 range to near $80,000, while many on-chain indicators suggest that selling pressure from short-term investors has significantly decreased. Notably, Bitcoin is currently trading above key cost-basis levels for many holders, while remaining below the extreme valuation zones seen at previous cycle peaks.

On August 18, 2026, the SEC proposed the Regulation on Crypto Assets , creating a specialized framework for the issuance of certain crypto assets and establishing a mechanism for determining when investment contracts associated with tokens can terminate. Importantly, this proposal not only focuses on new issuances but could also help address the legal uncertainty surrounding many existing assets in the market. If further refined, it could potentially reduce the legal premium risk that has historically been a significant discount factor for digital asset valuations.

Alongside legal changes, institutional capital is becoming increasingly integrated into traditional financial infrastructure. The expansion of Bitcoin custody services by major financial institutions, the continued increase in BTC holdings by businesses, and the development of stablecoins demonstrate that Bitcoin is no longer positioned solely as a purely speculative asset, but is gradually being integrated into the digital financial and payment system. Among recent developments, Citi announced it will launch crypto custody services for institutional clients, starting with Bitcoin; Japan also continues to see large-scale corporate transactions involving BTC accumulation.

Spot Bitcoin ETFs and institutional BTC holders have become a new source of structural demand, while STH/LTH data shows that long-term supply continues to play a significant absorbing role. Combined with the easing of selling pressure on STH, this suggests that the previous correction partially performed its function of cleaning up weak supply , laying the groundwork for a new revaluation.

Analyzing on-chain metrics

The STH Realized Price currently serves as the most important pricing threshold for Bitcoin in the short term . The earlier period when Bitcoin was below $67,300 created significant pressure on new holders, but the fact that this pressure persisted without turning into capitulation suggests the market absorbed the weak supply relatively well. Once Bitcoin broke back above this cost basis, the short-term pricing structure showed a clear improvement.

In contrast to 2024, where the STH-MVRV repeatedly fell to around 1.0 before Bitcoin resumed its upward trend, a difference occurred in 2026, witnessing a longer period of MVRV remaining below 1.0 and deeper losses in STH, prolonging the supply rebalancing process. Therefore, if Bitcoin maintains above the STH Realized Price, a shift of MVRV from below 1.0 to above 1.0 could be considered a crucial confirmation that the short-term supply rebalancing process has been largely completed.

After nearly 100 days below break-even, short-term holders have undergone a relatively deep consolidation phase without large-scale capitulation. The fact that BTC has now significantly surpassed the STH Realized Price range of around $67,300 after the surge above $77,000 significantly alters the profit status of short-term supply.

Bitcoin is moving out of the short-term holder discount zone and entering a positive revaluation phase . More importantly, the current MVRV level does not show the overheating corresponding to the late-cycle phases of previous periods. If the MVRV continues to advance towards the 1.15–1.25 region without a corresponding increase in realized losses, it would signal that the strength of the uptrend is shifting from a short squeeze to a genuine improvement in holder profitability .

The True Market Mean Price and AVIV Ratio indicators currently suggest that Bitcoin is not yet overvalued, but is in a revaluation phase after a deep discount period. With an AVIV of around 0.851 and a BTC price around $78,000, the True Market Mean Price is estimated at around $92,000, meaning Bitcoin is still about 15% lower than the representative cost basis of active investors.

However, there is a discrepancy: Bitcoin has increased by over 20% in just one week, while AVIV has yet to break through the 1.0 equilibrium level. From an asset valuation perspective, Bitcoin has not yet entered a premium state and has not formed the valuation characteristics typically seen in the overheated phases of previous cycles.

Alternatively, Bitcoin's current valuation is in a recovery phase from a discount period, with a positive revaluation trend but not yet reaching a valuation expansion phase . Bitcoin's move toward and beyond this zone would mark a fundamental shift from "undervaluation recovery" to "valuation expansion" ; conversely, the continued presence of AVIV below 1.0 would indicate that the market is still absorbing the effects of the previous correction.

Therefore, although Bitcoin has escaped the extreme discount zone, it has not yet entered the high valuation zone. With an AVIV of around 0.85, the current structure is consistent with a bullish revaluation phase, where the $92,000 region serves as a crucial reference point to determine whether the market has moved into an expansionary valuation phase.

Most notably, there was a reversal in the flow of Spot Bitcoin ETFs in August 2026. After the ETFs recorded approximately $3.9 billion in outflows in the week ending August 14th , the flow reversed sharply. In just four trading sessions from August 17th to 20th, Spot Bitcoin ETFs in the US recorded a total inflow of approximately $1.61 billion , with August 20th alone reaching $606.3 million , the highest level since May 1st.

If we convert this capital based on a price range of approximately $75,000–$78,000/BTC, $1.61 billion, equivalent to about 20,500–21,500 BTC, was absorbed through ETF products in just four trading sessions. This indicates that institutional demand is returning after a period of distribution, while the supply of Bitcoin to the market has not increased correspondingly .

Within this structure, Strategy needs to be evaluated separately as it is one of the largest Bitcoin holders in the market. As of July 26, 2026, Strategy announced it held 843,775 BTC , equivalent to more than 4% of the total maximum supply of Bitcoin. The company also recorded a 25% increase in its BTC holdings since the beginning of 2026. However, the data also shows that Strategy has shifted to a more cautious stance during the correction period. The company sold a total of 3,588 BTC in late June and early July, bringing its holdings down to 843,775 BTC and simultaneously building up USD reserves to meet its financial obligations.

However, the greater significance lies in the secondary supply . ETFs not only compete with new mining supply but also must absorb Bitcoin transferred out from LTH. The ETF's ability to absorb this supply will prevent the LTH distribution from turning into a new bearish cycle. Conversely, if the ETF flow quickly weakens after the current rally, the shifting LTH supply could become a source of renewed pressure.

Therefore, the current price range should be viewed as a confirmation phase of the demand structure shift , rather than simply a technical price surge. Bitcoin's more than 20% increase this week to near $79,000, coupled with ETF inflows reaching $1.61 billion in four sessions, suggests that the current rally is supported by actual spot capital flows.

The Bitcoin Spot Average Order Size is showing a positive structure for the revaluation process , as the price recovery is not accompanied by a corresponding surge in retail order sizes. Instead, the market is seeing a resurgence of large-cap activity at prices significantly lower than the cycle peak.

LTH Supply has undergone significant accumulation during the correction phase, with whales beginning to re-accumulate from the $60,000 region, while ETF Flow has reversed sharply to positive territory, supply is being absorbed at low price levels, large capital is returning, and institutional demand is expanding .

At previous peaks, the expansion of whale orders was often accompanied by a sharp increase in retail orders, reflecting an increasingly crowded and highly speculative market. Currently, the retail component has not reached a similar state, while Bitcoin has only recently recovered from the near $60,000 region to around $78,000. Therefore, the level of market speculation has not yet reached the extreme state corresponding to the current price increase .

The fact that whales have accumulated tens of thousands of BTC in about 60 days, combined with a strong return of ETF capital and Bitcoin's recovery of over 23% in a week, indicates that demand is clearly strengthening at the current price level . Therefore, considering only the Average Order Size , the current Bitcoin valuation does not yet show characteristics of a market that has entered a state of extreme speculation. On the contrary, the trading structure reflects the increasing participation of large capital while retail capital flows have not increased correspondingly.

The Average Order Size structure is supporting a higher Bitcoin valuation trend in the next phase, provided that large order sizes continue to be maintained at the current price level and retail selling hasn't shifted to extreme speculation; the market is still in a demand expansion phase rather than a late-cycle distribution phase.

Currently, Bitcoin is recovering from a discount period while Large Investor Holdings are rising, Retail Holdings are falling, and supply continues to be reallocated to large capital entities . Bitcoin is forming a systematic redistribution structure . Large Investor Holdings have increased by approximately 110,000-130,000 BTC since the end of 2025, while Retail Holdings have decreased by approximately 18,000-19,000 BTC from their most recent peak. This divergence occurs after Bitcoin underwent a correction of over 50% from its cycle peak, indicating that supply is shifting away from short-term traders towards large capital entities with a better supply absorption capacity.

In terms of valuation, this is a more important signal than the short-term price increase itself. Bitcoin is not currently rising on the basis of a strong expansion of retail ownership; on the contrary, the price is recovering amidst a redistribution of supply toward Large Investors. This structure reduces potential supply pressure and allows new demand to have a stronger impact on the price.

Therefore, the Bitcoin pricing trajectory in the next phase still leans towards expanding the price range , primarily based on changes in ownership structure rather than simply price momentum. As Large Investors continue to increase their BTC holdings while Retail Holdings decline, the supply structure becomes less flexible, laying the groundwork for a Bitcoin revaluation at a higher level. With the current price still significantly low compared to the peak above $120,000 of the previous cycle, this state does not yet reflect a late-cycle distribution market; on the contrary, it is more consistent with an accumulation and revaluation phase after a correction.

The Bitcoin Market Pulse Index (BMPI) currently shows a clear improvement in market sentiment after a sharp decline in the first half of 2026. While the index hasn't returned to the 2-3 range, the absence of overheating despite the price recovering to near $80,000 suggests that current valuations don't fully reflect a similar euphoric state as in 2025.

The BMPI from 2024 to August 2026 shows that Bitcoin's market momentum has completed the most crucial part of the bottoming process and is entering a recovery phase . The index previously fell to around -2 to -3 during the weakness period in early 2026, then recovered to the current 0–1 range. Although the current level is still much lower than the 2–3 range seen during the strong upward phases of 2025, the trend of the index's movement has shifted in a positive direction.

The most significant point for valuation is that the improvement in the BMPI has not been accompanied by an overheated state . Bitcoin has recovered more than 20% in a week and returned to near $80,000, but the BMPI remains around the 0–1 range. Therefore, according to this indicator, the market has not yet formed the characteristics of an extreme speculative phase; instead, momentum is being rebuilt from a low base after a deep correction cycle.

Current ETF data does not indicate that Bitcoin is overvalued. On the contrary, the market has just completed a significant discounting process, the MVRV ETF has reversed from below 1 to above 1, while ETF inflows have returned strongly. With the current structure, the underlying trend of Bitcoin valuation remains upward , and the current price range reflects the early stages of a valuation recovery from the previous cycle peak, rather than the end of the cycle.

Bitcoin has undergone a sufficiently deep correction to bring the MVRV ETF from its high valuation to below 1 , thereby erasing much of the unrealized profit from ETF inflows formed during the high price period of 2025. This represents a significant rebalancing in terms of valuation.

Currently, the MVRV ETF has recovered to around the $1.0-$1.1 range , while BTC is trading around $77,000-$79,000 . Compared to its peak of approximately $126,000, the price is still nearly 37% lower, and the returns of ETF inflows remain significantly lower than the peak of the cycle. Simultaneously, ETF inflows have reversed sharply, with approximately $2.1 billion in net inflows in August (up to August 20th) and $1.61 billion in the week of August 17-20 alone.

Therefore, Bitcoin is in the process of recovering its valuation after a period of deep discounts , while the MVRV ETF has not yet reached what could be considered an overheated zone. The gap between market price and ETF Realized Price is widening again but has not yet reached the extreme levels of 2025.

Bitcoin's need to maintain above the $70,000-$72,000 threshold is significant as a key ETF price range , and furthermore, the MVRV ETF continuing to rise above 1 would reinforce the revaluation trend. Conversely, in terms of cyclical valuation, only when the MVRV ETF moves back to similar highs as in 2025, and the BTC price approaches or surpasses its historical peak, can it be determined that the market has entered an overvalued state and the pressure for distribution has increased significantly.

The BCMI is currently confirming a significantly discounted Bitcoin valuation, but one that has yet to reach the extreme lows of historical cycle bottoms . The index has fallen from above 0.8-0.9 to around 0.30-0.33 , approximately 35-40% below the 0.5 reference level and about 60% below the peak. This is a sufficiently large correction to eliminate a significant portion of the high valuation in 2025.

Historical correlations on the chart suggest that the BCMI likely reflects changes in the Bitcoin market structure quite accurately. During periods when the BCMI expands to 0.6-0.9 , Bitcoin typically enters strong bull phases and forms cyclical peaks. Conversely, when the BCMI falls to 0.1-0.2 , the price of Bitcoin often simultaneously enters consolidation zones or cyclical bottoms.

Compared to previous lows, the BCMI remains significantly higher than the 0.10-0.15 range , so the data doesn't yet indicate a complete exhaustion. However, the fact that the index is currently below 0.5 and far from the 0.8-0.9 range suggests that Bitcoin is not currently overvalued .

The BCMI is placing Bitcoin in an intermediate valuation zone, leaning towards a discount , where much of the previous cycle's high valuation has been removed, while the market has not yet entered the extreme zone of a complete cyclical bottom. Therefore, considering only the BCMI, the risk of overvaluation is currently significantly lower than in 2025 , and there is still room for Bitcoin to re-expand its valuation if the BCMI can reverse and break back above the 0.5 level .

Considering the cycle of the Bitcoin Short-Term Holder Profit/Loss to Exchanges indicator, June 2026 could be seen as the peak of the weak supply release process. When STH Loss to Exchanges reaches its lowest levels, a large amount of BTC is listed on exchanges at a loss. Afterward, the indicator gradually recovers upwards while Bitcoin forms a price base around $60,000-$65,000.

By August, this structure had shifted to a different state. The price of BTC not only broke out of the $60,000-$65,000 accumulation zone but also rose to $79,306 , while the STH loss indicator did not return to the extreme levels of June.

In terms of supply and demand, this is a significant signal that weak supply has been released before the price entered the current uptrend , while the amount of STH experiencing losses has decreased. This reduces the likelihood of a sell-off simply due to short positions incurring losses. In other words, the market has shifted from a "bearish state where STH realizes losses leading to an increase in supply onto the exchange" to a "bullish state bringing STH out of the loss zone, ultimately reducing supply pressure on the exchange" .

The STH Loss to Exchanges indicator shows that the weak supply cleanup process from the previous correction is largely complete. The indicator is currently far from its peak of around 60,000 BTC/24H, while BTC has recovered to the 78,000-79,000 USD range, indicating that selling pressure is no longer a major obstacle to valuation. Therefore, based solely on this indicator, Bitcoin's underlying trend is shifting from a distribution and supply release phase to an absorption and upward revaluation phase.

Our assessment and conclusions

Bitcoin is currently in a recovery and re-expansion phase, but has not yet reached the extreme levels typically associated with major historical cyclical peaks . The MVRV, MVRV Z-Score, AVIV/True Market Mean Price, and STH MVRV metrics all indicate the market has moved out of the low valuation zone of the correction phase, while the gap to historical high valuation zones remains significant. Importantly, Bitcoin is currently maintaining above key holder cost bases and no longer shows the level of loss realization seen in STH during the previous sell-off.

From a relative valuation perspective, the current price does not yet reflect an overheated cycle . In previous cycles, the final stages of a bull market were often accompanied by a simultaneous increase in MVRV, MVRV Z-Score, unrealized profits, and speculative participation. Conversely, the current structure only shows a recovery in holder profits and an improvement in market liquidity. Bitcoin has broken through several key cost basis zones but remains below the valuation ceilings that appeared at major peaks. According to the data compiled in the report, this is characteristic of a market expanding its valuation from a neutral zone , rather than a market that has entered a late-cycle distribution phase.

Bitcoin is currently undergoing an upward revaluation and has not yet met the conditions for a cyclical peak . However, this does not mean the price will rise linearly. As the price moves further away from the cost basis, MVRV and unrealized returns indicators will continue to rise; at that point, the large supply of returns will become a potential source of supply, and the level of distribution needs to be reassessed. Therefore, the quality of the uptrend in the next phase will depend on whether the rate of price increase is correspondingly supported by new capital inflows and the ability to absorb the supply.

Disclaimer

This report was prepared by HCCVenture Research with the aim of providing information, research, and market analysis. The entire content of the report is based on publicly available data, on-chain data, market data, venture capital (Venture Capital) data, macroeconomic data, and HCCVenture's internal research methodologies at the time of publication. Data sources are compiled from numerous reputable research platforms and organizations, including but not limited to Glassnode, CoinGecko, TradingView, Dune Analytics, CoinGlass, CryptoRank, RootData, PitchBook, DefiLlama, CryptoQuant, Messari, Token Terminal, Artemis, CoinMarketCap , public blockchain data, reports from financial institutions, investment funds, blockchain companies, and other publicly available information sources. HCCVenture strives to select reliable data sources and applies a verification and cross-checking process throughout its research. However, HCCVenture does not guarantee the completeness, accuracy, timeliness, or error-free nature of all data due to differences in statistical methods, data collection scope, update times, or adjustments from data providers.

All opinions, assessments, valuation models, cyclical analysis, on-chain data, capital flow analysis, Venture Capital activity, ETFs, Digital Asset Treasury Companies (DATs), technical indicators, macroeconomic indicators, and scenarios presented in this report reflect only the research views of HCCVenture Research at the time of publication, based on available assumptions and data. These contents are not investment advice, financial advice, legal advice, accounting advice, tax advice, brokerage advice, portfolio management advice, or recommendations to buy, sell, or hold any digital asset, security, financial product, investment fund, blockchain protocol, or business. The digital asset and blockchain markets are highly volatile and are influenced by global liquidity, monetary policy, regulatory regulations, macroeconomic conditions, and many other unpredictable factors. Therefore, the trends, patterns, correlations, or historical cycles mentioned in this report are not guaranteed to repeat in the future and should not be considered reliable predictions of market developments. Readers should conduct their own independent research ( DYOR – Do Your Own Research ) and consult with qualified financial, legal, tax, or investment professionals before making any decisions. Any investment decisions or actions arising from the use of information in this report are the sole responsibility of the reader.

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