A shrinking share of Bitcoin holders is sitting on unrealized losses, and on-chain analytics firm CryptoQuant says the shift makes a return to a bear market increasingly unlikely.

CryptoQuant views the changing holder positioning as a sign of improving market conditions, with the declining number of "underwater" investors suggesting that Bitcoin bear market risk is becoming less pronounced.

An investor is considered "underwater" when Bitcoin trades below the price at which they purchased it. When a large share of the investor base holds unrealized losses, it can create additional market pressure — particularly during recoveries, when holders may choose to sell near their break-even levels. With fewer holders now in that position, this potential source of selling pressure appears to be weakening.

Fewer Bitcoin Holders Remain Underwater

CryptoQuant's assessment suggests Bitcoin's market structure is improving as more investors move back into profitable territory. A decline in underwater supply can indicate that the asset has moved further away from price levels where large groups of investors hold unrealized losses, and it can also support overall market sentiment as holders regain profitability. Because the measure is anchored to investors' purchase prices, its direction is straightforward to monitor in future readings: continued improvement would reinforce the healthier structure CryptoQuant describes, while a renewed slide toward the cost bases of large holder groups would push more investors underwater again.

The trend does not guarantee that Bitcoin will continue rising. Short-term corrections can still occur, while broader economic conditions, liquidity, and investor demand can quickly influence the market. Even so, CryptoQuant sees the reduction in underwater holders as evidence that bear market risk is becoming less significant.

INSIGHT: Fewer Bitcoin holders are underwater, making a return to a bear market increasingly unlikely, per CryptoQuant. pic.twitter.com/Ah4hWkgfsm — CointelegraphCointelegraph) September 17, 2026

Bitcoin Market Structure Shows Improvement

The latest on-chain signal adds another metric for traders attempting to gauge Bitcoin's position in the current market cycle. Investor profitability is closely watched because changes in unrealized gains and losses can influence holder behavior. As fewer investors remain underwater, the market may face less pressure from holders looking to exit positions after recovering previous losses.

CryptoQuant's analysis therefore points toward a healthier market structure, although Bitcoin's next major move will still depend on whether demand remains strong enough to absorb the available supply.