On-chain data reveals that nearly half of all Bitcoin is currently held at a loss, representing a significant overhead supply that may need to be absorbed before a price bottom can form.
Approximately 9.31 million Bitcoin is now being held at a loss, according to CryptoQuant community analyst Maartunn. In a recent post on X, he discussed why a true Bitcoin bottom takes time to develop, sharing a chart of the Bitcoin Supply in Loss indicator. This metric tracks the total amount of Bitcoin held at an unrealized loss.
As shown in the chart, the Bitcoin Supply in Loss dropped to zero when the asset reached its new all-time high in October. Since then, the indicator has risen sharply as Bitcoin’s price has declined. Currently, it stands at 9.31 million BTC, the highest level since the 2022 bear market. This represents about 46% of all circulating Bitcoin.
Typically, investors holding at a loss look for the price to return to their purchase level so they can exit without a loss. With so many investors in this position, Maartunn noted, “A large share of holders are waiting to sell at breakeven or a small profit.”
Another on-chain metric, the UTXO Realized Price Distribution (URPD), shows the specific price ranges where these underwater investors bought Bitcoin. The chart indicates that a large portion of the loss supply is concentrated between $80,000 to $95,000 and $105,000 to $120,000.
Given the current price of Bitcoin is far below these levels, many of these investors are likely to remain underwater in the near term. Any price recovery toward these ranges could face selling pressure as these holders look to minimize their losses.
“That overhead supply must be absorbed and redistributed to stronger hands before a durable bottom can emerge,” Maartunn explained.
During the previous bear market, the Bitcoin Supply in Loss fell to even lower levels, and the market experienced an extended consolidation period before this loss supply was transferred to more committed holders. It remains to be seen how long a similar process will take this time.
Meanwhile, Bitcoin’s price has been moving sideways since recovering from a low near $60,000, currently trading around $68,600.
Frequently Asked Questions
Of course Here is a list of FAQs about the topic Nearly half of all Bitcoin is currently held at a loss Heres what might signal a market bottom
Beginner Definition Questions
1 What does it mean that Bitcoin is held at a loss
It means that nearly half of all Bitcoin addresses currently hold coins that were purchased at a higher price than the current market price If they sold now they would lose money
2 What is a market bottom
A market bottom is the lowest price point an asset reaches during a downtrend before it starts to recover and move upward again Its the point where selling pressure exhausts itself
3 Why is it significant that so much Bitcoin is held at a loss
Historically when a large percentage of the supply is held at a loss it indicates widespread panic or capitulation This extreme negativity is often a necessary condition for a bear market to end as weak hands sell and stronger longterm investors accumulate
4 Is this a common situation in crypto markets
Yes This cycle of boom and bust is common Similar periods of high unrealized losses have occurred in past bear markets which eventually preceded major rallies
Analysis Signal Questions
5 What specific metric signals that half of Bitcoin is held at a loss
Analysts use a metric called MVRV ZScore or examine the Realized Price distribution When the market price falls significantly below the average price most coins were bought at it indicates many holders are underwater
6 What other signs besides high unrealized losses might point to a market bottom
Key signals often include
Extreme Fear Sentiment indices hitting prolonged Extreme Fear levels
Liquidations A spike in forced selling from overleveraged traders
Decreased Exchange Inflows Fewer new coins being sent to exchanges suggesting holders are choosing to wait rather than sell
Strong Accumulation Data showing large experienced investors are consistently buying more Bitcoin at these lower prices