Summary

  • Investors in Bitcoin, Ethereum, and XRP are experiencing significant losses as the crypto market declines, with over 8 million BTC currently at a loss.
  • During these capitulation events, “future winners separate themselves from the field,” according to insights shared with Decrypt.
  • Market sentiment remains negative, with Myriad users estimating a 75% likelihood of Bitcoin retesting $55,000.

The downturn in the crypto market in 2026, primarily influenced by Bitcoin's poor performance, has adversely affected most altcoins, as confirmed by on-chain analytics.

At the peak of the cycle, almost half of Bitcoin's circulating supply was profitable, but that figure has drastically fallen, with more than 8 million BTC now underwater, illustrating the extent of the recent market reset, according to Glassnode reported on Tuesday.

A similar trend is observed with Ethereum, the second-largest cryptocurrency by market cap. Glassnode noted that “the share of Ethereum supply showing profits exceeding 3x has decreased to 11%, the lowest level since February 2017.” In previous cycles, this percentage surpassed 50% at its peak, but this time it did not reach that mark. “Ethereum’s profitability profile has fundamentally contracted compared to earlier cycles,” the analytics firm stated.

According to CoinGecko, both Bitcoin and Ethereum have dropped approximately 31% and 46% respectively in 2026. XRP has seen a year-to-date decline of 41%, slightly outperforming Ethereum, yet XRP holders have witnessed a sharp decline in profits and network adoption.

The 90-day simple moving average (90D-SMA) of XRP's Realized Profit to Loss Ratio has decreased to 0.38, indicating that for every dollar lost in the market, only 38 cents of profit is being realized.

Glassnode highlighted that “at the peak in 2025, this ratio was at 50, showing that profit-takers were outpacing loss-sellers by a factor of 50x.” The current ratio being significantly below 1 suggests a market where most participants are incurring losses when trading, a sign of intense capitulation.

Gracy Chen, CEO of Bitget, commented that periods of market stress often reveal investor attitudes towards risk and timeframes. “A notable portion of the market is enduring unrealized losses, which has historically been associated with lower sentiment and increased caution,” Chen told Decrypt. “For long-term investors, these times may serve as a chance to reassess their convictions and portfolio strategies instead of reacting solely to short-term price fluctuations.”

Similarly, the 90D-SMA of total fees on the XRP network has plummeted by 91.5%, from 5,900 XRP in February 2025 to about 500 XRP today, indicating a near-total decline in organic transaction demand since the speculative peak.

What Lies Ahead for Altcoins?

Many altcoins have fallen between 50% to 80% from their all-time highs, reflecting a persistent downtrend amid geopolitical uncertainties. However, select altcoins such as Hyperliquid, along with privacy coins Zcash and Canton, are continuing to outperform the broader altcoin market, as previously reported by Decrypt.

“It is becoming increasingly evident that this bear market is accelerating a transition from narrative-driven tokens to cash-flow-generating protocols,” stated Matthew Pinnock, COO at Altura DeFi, in comments to Decrypt. “Hyperliquid's achievements indicate that investors are placing a higher value on tokens linked to revenue, buybacks, and strong product-market fit. The market is becoming less tolerant of dilution and more focused on fundamentals.”

Chen concurred, noting the market's increasing discernment: investors are “now more attentive to actual product usage, revenue generation, token utility, and community alignment rather than mere hype.”

Despite Bitcoin's ongoing downturn in 2026, which has triggered altcoin capitulation amidst geopolitical turmoil, experts remain skeptical about whether the bottom has been reached.

Pinnock remarked that “this correction appears to be less about a decline in crypto adoption and more about a reassessment of risk,” suggesting a potential silver lining to the otherwise bleak sentiment enveloping the crypto landscape.

“Historically, these moments are when future leaders distinguish themselves from the competition,” he explained, adding that as liquidity returns, investment may narrow into a smaller selection of assets capable of demonstrating sustainable revenue rather than relying solely on exchange listings, token unlock schedules, or venture-backed narratives.

Currently, Bitcoin is down 2.4% in the last 24 hours, trading around $61,080. Users on the prediction market Myriad, which is owned by Decrypt’s parent company Dastan, indicate a pessimistic outlook, giving Bitcoin's next move to $55,000 a 75% probability, increasing from 61% on June 1.