A growing portion of Bitcoin’s supply is now held at a loss, with CryptoQuant contributor Darkfost suggesting the market is nearing conditions typical of historical bear phases rather than a confirmed bull run. His analysis shows that 43% of the Bitcoin supply held in unspent transaction outputs (UTXOs) is currently underwater, meaning only 57% is in profit.
Darkfost examines the distribution of supply across Bitcoin’s UTXOs to track how much of the supply is above or below its acquisition cost. According to his interpretation, this metric has entered a zone that has historically separated advancing bull markets from broader corrections.
“Roughly one out of two investors is currently at a loss. More precisely, this refers to the supply held within each UTXO on Bitcoin. At the moment, 43% of that supply is in loss,” he stated on X. He added that “historically, as the histogram shows, we usually see around 75% of the supply in profit,” describing that level as a “rough boundary between a bull trend and a market correction.”
This perspective is central to his thesis. Darkfost notes that when the share of supply in profit climbs back above approximately 75%, bull trends have typically “confirmed and accelerated.” Conversely, when more supply falls into loss, corrections tend to deepen, confidence wanes, and the market begins to mirror prior bear-market structures. With Bitcoin currently at 57% supply in profit, he believes conditions appear “closer to those seen during deep bear market phases.”
However, he does not view the current situation as an inevitable collapse. Darkfost points to signs of market stabilization, which he associates with the ongoing consolidation phase. Still, he cautions that the process may not be over. “It is still possible that the market moves lower in order to shake out long-term holders further and push the share of supply in loss toward around 45%, a level that has been reached during previous bear markets,” he wrote.
His second chart links this on-chain weakness to a less supportive macroeconomic environment for risk assets. Darkfost argues that rising oil prices, driven by escalating tensions around the Strait of Hormuz, have added pressure on Bitcoin. “Since the beginning of the year, oil has gained more than 60%, a dramatic increase reflecting market concerns over the geopolitical situation,” he explained. “This is not surprising, given that the Strait of Hormuz accounts for about 20% of global daily oil exports and nearly 35% of oil transported by sea. Any incident that blocks the strait or disrupts transit therefore has an immediate impact on oil prices.”
He extends this argument beyond energy markets, noting that higher oil prices directly fuel inflation expectations and broader financial stress—conditions historically unfavorable for speculative assets. “For a volatile and risky asset like Bitcoin, this type of environment is unfavorable,” Darkfost wrote. “Historically, periods when oil prices regain strength often coincide with BTC end-of-cycle phases. These moments also signal geopolitical tensions, which are not conducive to risk-taking or exposure to more speculative assets.”
Together, these charts depict a market that is not yet decisively in a bear trend but is drifting toward a zone where that possibility becomes harder to ignore. The key question now is whether Bitcoin can increase its share of supply in profit and reclaim the historical 75% threshold, or if macroeconomic pressures and further selling by long-term holders will push the market deeper into loss territory first.
At the time of writing, BTC is trading at $67,730.
Frequently Asked Questions
FAQs Nearly Half of All Bitcoin Held at a Loss
Beginner Questions
1 What does it mean that Bitcoin is held at a loss
It means the current market price of Bitcoin is lower than the price at which those coins were originally purchased The owners would lose money if they sold their Bitcoin right now
2 How do we know nearly half is held at a loss
Analysts use blockchain data to track the price at which Bitcoin last moved They compare this to the current market price to determine if an address is in profit or in loss
3 Is this a bad sign for Bitcoin
Its a sign of a significant market downturn and widespread investor pain Historically such high levels of coins held at loss have occurred near major market bottoms but it doesnt guarantee an immediate price recovery
4 Should I be worried if Im holding Bitcoin at a loss
It depends on your investment strategy If you believe in Bitcoins longterm potential and dont need the money immediately holding is a common strategy Selling at a loss turns a paper loss into a real one
Advanced Practical Questions
5 What is the Realized Price and why is it important here
The Realized Price is the average purchase price of all Bitcoin in circulation When the market price falls below this level it indicates that a large portion of the market is underwater Its a key metric for identifying bear market conditions
6 What is the MVRV Ratio and how does it relate
The Market Value to Realized Value Ratio compares Bitcoins market cap to its realized cap A ratio below 1 signals the market price is below the average cost basis a classic indicator of a bottoming phase
7 Does this create selling pressure or capitulation
It can Investors holding at a loss may panic and sell creating increased selling pressure This capitulation often exhaustes sellers and can pave the way for a price floor but it can also lead to further shortterm declines
8 What happened the last time such a large percentage was held at a loss
Similar scenarios played out during the major bear markets of 20182019 and late 2022