‘Intense Capitulation’ Hits Crypto as 8M BTC, Bulk of ETH Supply Sit at Loss

The crypto market’s 2026 drawdown, driven by Bitcoin’s lackluster performance, has weighed heavily on most altcoins—borne out by on-chain data.

Nearly half of Bitcoin’s circulating supply was in profit at the cycle peak. That has dropped sharply, with over 8 million BTC sitting underwater, “highlighting the scale of the recent market reset,” Glassnode posted Tuesday.

A similar conclusion can be drawn for Ethereum, the second-largest cryptocurrency by market capitalization. “The share of Ethereum supply sitting at more than 3x profit has dropped to 11%, the lowest reading since February 2017,” Glassnode wrote. Compared to the last two cycles, that cohort exceeded 50% of the total supply at peak. “This time, that threshold was never reached. Ethereum’s profitability profile has fundamentally compressed relative to prior cycles,” the on-chain analytics firm said.

Both Bitcoin and Ethereum are down roughly 31% and 46% in 2026, according to CoinGecko data. XRP’s year-to-date performance shows it is down 41%, doing slightly better than Ethereum, but XRP holders’ profits and network adoption have tanked sharply.

The 90D-SMA of XRP’s Realized Profit to Loss Ratio has fallen to 0.38, indicating that for every dollar of loss being realized in the market, only 38 cents of profit is being taken.

“At the 2025 peak, this ratio reached 50, meaning profit-takers were overwhelming loss-sellers by a factor of 50x,” Glassnode wrote. “That dynamic has fully inverted. A ratio this deep below 1 reflects a market where the majority of participants who are moving coins are doing so at a loss, a hallmark of intense capitulation.”

Periods of market stress often reveal how investors think about risk and time horizon, according to Gracy Chen, CEO of Bitget. “We’re seeing a meaningful portion of the market sitting on unrealized losses, which historically has coincided with lower sentiment and greater caution,” Chen told Decrypt. said. “For long-term participants, these periods can be useful for reassessing conviction and portfolio positioning rather than reacting purely to short-term price movements.”

On a similar trajectory, the 90D-SMA of total fees paid on the XRP network has also fallen 91.5%  from 5,900 XRP in Feb 2025 to roughly 500 XRP today, suggesting a “near-total contraction in organic transaction demand on the network since the speculative peak.”

What’s next for altcoins?

Most altcoins are down over 50% to 80% from their all-time highs, indicating a sustained downtrend amid geopolitical uncertainty. However, a few select altcoins like Hyperliquid, driven by fundamentals, and privacy coins Zcash and Canton, continue to outperform the rest of the altcoin complex, Decrypt previously reported.

“What is becoming clearer is that this bear market is accelerating a shift from narrative-driven tokens toward cash-flow-generating protocols,” Matthew Pinnock, COO at Altura DeFi, told Decrypt. “Hyperliquid’s success has shown that investors are increasingly valuing tokens like tokenized equity, rewarding projects with revenue, buybacks, and strong product-market fit. The market is becoming far less tolerant of dilution and far more focused on fundamentals.”

Chen agreed, noting that the market is becoming more discerning, explaining that investors are “now paying closer attention to actual product usage, revenue generation, token utility, and alignment between communities rather than pure hype.”

Despite Bitcoin’s sustained correction in 2026, which led to altcoin capitulation amid geopolitical uncertainty, experts don’t believe the bottom is in yet.

“This correction feels less like a collapse in crypto adoption and more like a repricing of risk,” Pinnock said, underscoring a potential bright side to the otherwise pessimistic sentiment pervading the crypto ecosystem.

“Historically, these periods are when future winners separate themselves from the field,” he explained, adding that when liquidity returns, capital could “concentrate into a smaller group of assets that can demonstrate durable revenue rather than simply relying on exchange listings, token unlock schedules, or venture-backed narratives.”

Bitcoin is down 2.4% over the past 24 hours and is hovering at around $61,080. Users on prediction market Myriad, owned by Decrypt’s parent company Dastan, reflect its gloomy outlook, assigning the leading crypto’s next move to $55,000 a 75% chance, up from 61% on June 1.