From Square One to 100: Bitcoin Bottom Indicators That Actually Work

My journey with Bitcoin started humble—buying BTC under $10 billion market cap at just $700, then scaling to significant profits during 2017’s ICO boom. Since then, I’ve distilled decades of market observation into a practical framework: when you understand these four indicators, you stop panic selling at the bottom. This progression from beginner to advanced trader requires mastering each signal systematically.

Level 1: The Foundation—Puell Multiple as Your Entry Signal

The Puell Multiple measures miner revenue relative to historical standards, making it the most reliable bottom indicator in our arsenal with a 100% success rate across cycles. When this metric drops below 0.5, every active miner operates at a loss. Without exception, we’ve bottomed every single time this threshold broke. Currently sitting at 0.66 in February 2026, the indicator hasn’t yet triggered its ultimate signal.

Here’s what this means practically: miners frontrun this indicator now—they’ve had eleven years to study it. The likelihood of us hitting that critical 0.5 level appears lower as the market increasingly prices in this historic accuracy. Yet the signal remains your foundational checkpoint for recognizing exhaustion capitulation.

Level 2: Production Cost—Understanding When Miners Must Liquidate

Bitcoin’s production cost represents the all-in expense miners face creating new BTC: primarily electricity plus hardware depreciation. As of late February 2026, this hovers around $77,000–$79,000 per coin. With BTC currently trading at $67,270, miners face underwater positions.

This indicator carries a 90% historical success rate because it creates an economic forcing function. When prices remain substantially below production costs, miners eventually liquidate their reserves to maintain operations. Consider that miners currently control approximately 20% of all circulating Bitcoin—this is their capitulation point. Think of it like Michael Saylor being forced to dump MicroStrategy holdings to keep lights on. When this capitulation completes and miners exhaust their reserves, we typically bottom. Most uninformed traders miss this because they don’t understand the underlying economics.

Level 3: MVRV Z-Score—The Advanced Measurement

MVRV Z-Score compares current Bitcoin price against the average acquisition price of all coins, adjusted for typical volatility patterns to maintain statistical relevance. Currently positioned at 0.4 with historical bottoms occurring around -0.3, this suggests we’ve underperformed average upside expectations by 130%.

The sophisticated observation: just as traders now frontrun traditional indicators, we might see frontrunning on the downside as well. This could mean bottoms forming higher than historical precedent suggests—potentially around 0.20, implying a $59,000 price floor. The metric continues evolving as market participants become increasingly aware of its predictive power.

Level 4: On-Chain Supply Dynamics—Reading the Crowd

Currently, 54% of on-chain Bitcoin remains in profit positions as of February 2026. Historically, when this percentage drops to 45% or lower, we stand at market extremes. However, this standard metric requires adjustment for modern market structure.

ETF inflows and large institutional holders—particularly those with 9.9% of total supply—now sit substantially underwater. When you mathematically subtract their impact from Glassnode’s reported 54% supply-in-profit figure, the true effective percentage drops closer to 47%. This represents a textbook bottom formation by traditional standards, signaling we’re in the zone where capitulation reaches critical mass.

The Advanced Move: Your Personal Strategy Matters Most

I’ve shared these four indicators because they represent the most reliable signals across market cycles. Puell Multiple’s 100% accuracy, Production Cost’s 90% track record, MVRV Z-Score’s 80% reliability, and Supply-in-Profit metrics all point toward concrete decision points rather than emotional trading.

The meta-lesson from squaring your knowledge from beginner to advanced levels: develop a plan that actually works for your capital and temperament, then maintain discipline executing it. Simplicity typically outperforms complexity. Most traders lose at bottoms because they overthink signals instead of trusting the framework they’ve built.