Glassnode’s Q3 report, produced with Coinbase Institutional, said Bitcoin (BTC) is in the early stages of a potential bottoming process, though it does not yet amount to a durable low. The firms kept a neutral stance for the quarter and tied price action more to the liquidity cycle than crypto-specific catalysts, as macro liquidity conditions stay firm. In Q2, total crypto market capitalisation fell by around 12%, while stablecoin supply hit record highs and its dominance rose, pointing to a rotation into stablecoins. The current Bitcoin cycle, which began in 2022, has now run 42 months and started diverging from the 2015–18 pattern in Q1 2025.
Cross-asset correlations also shifted: BTC daily return correlation with the S&P 500 slipped to 0.12 in Q2 2026 from 0.58 in Q4 2025, while correlation with gold rose to 0.57. On-chain indicators showed BTC’s MVRV ratio approaching 1 in Q2, and the share of supply held in profit fell below its lower statistical band, consistent with a historical accumulation zone heading into Q3. Entity-adjusted NUPL moved into the fear zone near “Capitulation”, derivatives open interest stayed well below its late-2025 peak, and BTC was at $64,140, down 1.6% over 24 hours.
Long-Term Bottom Formation and Accumulation Phase
We are currently seeing strong signs that Bitcoin is carving out a long-term bottom as we move deeper into the third quarter of 2026. Because speculative activity has hit multi-year lows and long-term holding is rising, we should expect a slow, choppy accumulation phase rather than sudden, explosive price jumps. For derivative traders, this means aggressive leverage should be avoided in the coming weeks while the market builds a more stable floor.
Shifting Correlations and Strategic Implications
We must shift our focus away from the stock market, as Bitcoin’s correlation with the S&P 500 dropped sharply to just 0.12 in the second quarter of this year. Instead, we should closely monitor gold and macroeconomic liquidity, given that Bitcoin’s correlation with gold has climbed to 0.57. With global liquidity cycles heavily influencing price action, trading strategies should align with broader monetary shifts rather than crypto-specific news.
To back up this view, we can look at the macro picture where the Federal Reserve’s benchmark interest rate remains steady around 4.0% in mid-2026, keeping global liquidity tight. Additionally, net flows for US spot Bitcoin ETFs saw a modest slowdown in early July, reflecting a temporary pause in institutional buying. We should use this quiet period to set up range-bound derivative strategies, like iron condors, to capture premium while volatility remains low.
Because open interest is still far below the peaks we saw in late 2025, the risk of massive, sudden liquidations is relatively low right now. However, we must remain cautious of downside risks, as a break below key support levels could trigger delayed capitulation. We suggest maintaining conservative position sizes and focusing on accumulating long-term call options while implied volatility is cheap.
