Bitcoin Stress Cycle Is Ending — But Traders May Hate What Comes Nex

Bitcoin may have survived the worst of the shock, but the data says this is stabilization, not escape velocity.

A Bitcoin Reset Underway?

According to CryptoQuant, the current conditions suggest a reset is underway, with Bitcoin working through a broad deleveraging phase. Yet even as market stress eases, the top cryptocurrency still hasn’t carved out a definitive bottom in this bear cycle.

Analyst MorenoDV_ believes Bitcoin’s on‑chain/derivatives “stress cycle” indicators are rolling over, suggesting the market is exiting an acute stress phase, but not yet entering a clean bullish reversal regime. The analyst says that alignment between Bitcoin’s Short-Term Sharpe Ratio and the 30-day Buy/Sell Pressure Delta is signaling one of the strongest risk/reward profiles of the current cycle, but it still calls for patience.

A stress cycle is a phase marked by elevated unrealized losses, forced deleveraging, compressed futures basis and defensive options positioning.

The analyst starts by looking at the Sharpe Ratio. The current value has dropped far into negative territory, hitting around −40, a level that has historically signaled major buying zones. In past cycles (2015, 2019, 2020, and 2023), every time the ratio fell below this line, Bitcoin later saw a strong repricing higher.

We are now sitting in the same red-circled territory shown in the graphics, the analysis say.

According to the analyst, the Buy/Sell Pressure Delta helps explain where we are in the bottoming process. Bottoms don’t happen all at once: they unfold in stages.

First, there’s a big wave of selling (orange/red spikes below −0.05) when forced sellers and panicked investors dump their coins. Then, selling pressure slowly cools down and moves back into the green zone as fewer people are willing to sell. The best entries usually show up when the delta finally moves into the blue “Buy Pressure” area, which means real buying demand is coming back, not just that selling has slowed.

The report claims that the heavy selling phase is likely behind us and we have entered the middle stage. The delta is recovering but hasn’t yet reached strong buy territory. Historically, that gap is where some of the best opportunities have appeared.

This analysis aligns with the QCP Market Colour from yesterday. Their report claimed Bitcoin’s movement looks more like a temporary pause than a lasting resolution

There’s still risk, the analyst warns. The macro backdrop, liquidity, and weak sentiment could drag this out. But for investors who think in cycles, the data suggests we’re closer to the start of a new opportunity than to the end.

Cover image from Perplexity. BTCUSD chart from Tradingview.