46% Of Bitcoin Supply Now In Loss—What It Could Take For A Bottom

On-chain data shows almost half of all Bitcoin is currently underwater, representing overhead supply that might need to be absorbed before a price bottom.

Around 9.31 Million Bitcoin Is Now Being Held At A Loss

In a new post on X, CryptoQuant community analyst Maartunn has talked about why a true Bitcoin bottom takes time to form. To illustrate his point, Maartunn has shared a chart for the Bitcoin Supply In Loss, an indicator that measures, as its name suggest, the total amount of the cryptocurrency that’s being held at a net unrealized loss.

Bitcoin Supply In Loss

As is visible in the above graph, the Bticoin Supply In Loss shrunk down to zero as the asset set its new all-time high (ATH) back in October. Since then, however, the metric’s value has sharply expanded as the cryptocurrency has gone through its bearish reversal.

Today, the indicator is sitting at 9.31 million BTC, which is the highest that it has been since the 2022 bear market. In terms of supply percentage, this amount is equivalent to 46% of all tokens in circulation.

Generally, holders in loss look forward to retests of their cost basis level so that they can exit with their capital back. Currently, there would be a significant amount of such investors. “A large share of holders are waiting to sell at breakeven or a small profit,” noted the analyst.

Another on-chain indicator called the UTXO Realized Price Distribution (URPD) showcases which levels exactly the underwater hands bought their Bitcoin at.

Bitcoin URPD

As displayed in the indicator’s chart, the Bitcoin loss supply is particularly clustered between the $80,000 to $95,000 and $105,000 to $120,000 ranges. Given the distance that the current BTC price has to these levels, it’s possible that traders who bought inside the ranges will stay underwater in the near future.

Upward moves for the asset would naturally be met with selling pressure from these investors looking to cut their losses. “That overhead supply must be absorbed and redistributed to stronger hands before a durable bottom can emerge,” explained Maartunn.

During the previous bear market, the Bitcoin Supply In Loss dropped to even lower levels than now and the market observed a long phase of consolidation before this transfer of loss supply to more resolute hands could occur. It now remains to be seen how long the cryptocurrency will take to reach a floor this time around.

BTC Price

Bitcoin has taken to sideways movement since its recovery from the $60,000 low as its price is still trading around $68,600.

Bitcoin Price Chart