Data from on-chain analytics platform Glassnode reveals that as Bitcoin briefly fell to $61,300, the number of BTC held at an unrealized loss surged to around 10.5 million, overtaking the 9.8 million in profit for the first time this market cycle. This marks the initial instance in this cycle where loss-making coins outnumber those in gain, with over half of the circulating supply now underwater.
A Rare Signal of Market Stress
The sharp increase in unrealized losses directly illustrates the deepening degree of paper losses among market participants. Historically, a situation where more than half of the BTC supply was at a loss has almost exclusively occurred during deep bear market phases. Similar conditions were observed in the major bear markets of 2015, 2019, 2020, and 2022, though the duration varied significantly, ranging from one month to a full year, underscoring the extreme nature of this metric and its connection to cyclical bottoms. Past trends show that such extreme readings have repeatedly coincided with market price floors, often serving as a critical framework for long-term investors to assess risk.
The current data aligns with levels seen during previous bear cycles, indicating that a majority of market participants hold positions with a cost basis above the current price, reflecting widespread floating losses. While historical precedent suggests this indicator has frequently aligned with key bottoming areas, it does not, by itself, provide a precise timing signal for price reversals but rather highlights cyclical valuation pressure.
Battleground at Key Support Levels
Bitcoin's descent to the $61,300 zone also places it squarely near its 200-week moving average. Widely considered by long-term investors as a bull-bear dividing line, this moving average has acted as critical support during multiple sell-offs in past cycles, making it a key reference for gauging the market's long-term trend.
Analysts note that should Bitcoin break below the psychologically important $60,000 level, the next technical support would lie near the realized price of roughly $54,000. The realized price represents the average cost basis of all BTC at the time of their last on-chain movement, reflecting the aggregate cost of coin holders. Notably, in each of the previous major bear markets, Bitcoin has at some point traded below its realized price, and whether this pattern repeats will serve as a key gauge for the depth of the current market adjustment.