Bitcoin supply in losses overtakes profits, a hallmark of bear market bottoms

The amount of bitcoin BTC$62,661.32 supply with losses reached an important bear market threshold and exceeded 10 million BTC, more than half of the total in circulation.

According to Glassnode data, the number peaked at a one-hour resolution of around 10.5 million BTC as the price fell to as low as $61,300 on Thursday. Total circulating supply is about 20 million BTC, so more than half of all coins are currently held at an unrealized loss.

At the same time, the supply of profits has decreased to about 9.8 million BTC. This is the first time during the current market cycle that the amount of bitcoin held at a loss has exceeded the amount in profit.

Historically, this transition has only occurred during deep bear market conditions and has often coincided with major market bottoms.

Previous cycles provide some context.

During the 2015 bear market, supply in losses and supply in profits remained close to equilibrium for nearly a year before the market recovered. In 2019, the period lasted around six months. The March 2020 Covid-driven capitulation was shorter, lasting about a month, and the 2022 bear market saw this condition persist for about six months.

The takeaway is that while this signal has historically aligned with bear market lows, the duration of these periods has varied significantly, making it difficult to estimate how long bitcoin could remain at a low level.

Adding to the significance of the recent decline, bitcoin touched its 200-week moving average of around $61,300. The metric is a long-term trend indicator that calculates bitcoin’s average price over the previous 200 weeks. It has historically served as an important support level during every bear market cycle.

Should bitcoin fall below the psychologically important $60,000 level, the next major support zone is around $54,000, which corresponds to the realized price. The realized price represents the average acquisition price of all bitcoin in circulation based on the price at which each coin was last moved on the chain. Bitcoin has traded below its realized price in every major bear market.