The share of speculators has plummeted to 27.6%: Bitcoin enters a zone of historical undervaluation
The Bitcoin market is sending a powerful structural signal. The "Realized Dominance" metric shows that the share of short-term holders (STH) in the realized capitalization of the leading cryptocurrency has dropped to 27.6%. This is an extremely low value that historically precedes the formation of major cyclical bottoms.
Realized dominance is a key indicator that helps determine who exactly controls the market: speculators buying on emotions or long-term investors with "diamond hands." When STH dominance falls below 28.7%, the asset enters the so-called "undervaluation zone" — the bottom 10% of all historical observations. It is in this zone that the market typically clears out weak hands and prepares for a new bull cycle.
How Peaks and Bottoms Form on the Chart
Analysis of historical data reveals a clear pattern. At the peaks of the 2013, 2017, and 2021 cycles, the share of speculative capital surged to extreme values — above 94.8%. At such moments, aggressive buyers enter the market, redistributing coins at inflated prices. This is the classic euphoria phase.
The bearish trend triggers the reverse process. Short-term holders lock in losses and exit the market, with their capital flowing to long-term investors who accumulate the asset at lower prices. The current value of 27.6% is not a coincidence but the result of a prolonged "flushing out" of speculators.
What the Current Data Means
In my assessment, the current market structure is much closer to the accumulation phases of past cycles than to peaks. However, it is important to understand: historical bottoms form as a process, not a one-time event. In previous cycles, STH dominance continued to decline as more unstable participants capitulated before the recovery.
Right now, we see that speculation has been largely washed out, and long-term holders are regaining control of the market. Bitcoin is approaching a structure historically associated with major cyclical lows. However, there remains a risk that before the start of a new accumulation phase, another capitulation phase may be needed — the so-called "capitulation of disappointment."
My conclusion: The market is in the final stage of the bear cycle. The drop in the speculators' share to 27.6% is a bullish signal for long-term investors. But I would not rule out the possibility of one more local decline that would knock out the last "paper hands" and create ideal conditions for a new bull rally. Patience and discipline are the main tools in the current phase.