A sharp increase in the share of Bitcoin supply sitting at a loss, now at 40.6%, has put crypto market analysts on alert. According to CryptoQuant data, while this level has not yet reached previous capitulation zones, it is edging closer to a historically significant accumulation range seen in past market cycles.
Renewed focus on supply in loss
This indicator tracks what portion of circulating Bitcoin is held below its acquisition cost. CryptoQuant analyst MorenoDV notes that the current 40.6% figure signals growing market pressure, but based on historical data, has not yet entered the “maximum opportunity” territory that has marked pronounced market bottoms in previous years. CryptoQuant remains a trusted source of blockchain analytics and market intelligence in the crypto sector.
According to MorenoDV, the latest reading reveals clear signs of market stress, but has not crossed into the “maximum opportunity” zone typical of major market lows in past cycles.
Historical analysis shows a downward trend in this metric since 2015. At every major cycle bottom, the supply held at a loss approached the upper boundary of this descending trendline. This pattern suggests that deeper cycle lows in the past required an even larger share of loss-making holders.
Previous market cycles saw even steeper losses for investors. During the 2015 to 2016 bottoms, more than 60% of the supply was underwater. The period between 2018 and 2019 and the 2020 to 2022 bear market lows also featured notably high loss ratios. MorenoDV points out that each successive cycle bottom is forming at a lower supply-in-loss threshold, which may point to an evolving market structure.
Changing market dynamics lower the bottom threshold
The analyst attributes this trend to a growing presence of long-term investors, greater institutional participation, and the influence of spot Bitcoin ETFs. As a result, reaching a cycle bottom may no longer require over 60% of supply to be held at a loss; the threshold may now be closer to the high 40% range.
While the current 40.6% level suggests building market pressure, it still falls short of the most notable accumulation zones in the past. If Bitcoin remains sideways or declines further, the indicator could approach its historical trendline even more closely.
Analysts debate where the bottom lies
Crypto commentator Frigg highlights the same data, noting that around four out of every ten Bitcoin investors are now underwater. Frigg recalls that during the 2015 to 2016 lows, this figure was about 63%, dropping to 59% in 2018 to 2019, and 53% in the 2022 to 2023 cycle. This gradual decline suggests that fewer investors may need to be in loss before the market finds a stable equilibrium.
Frigg cautions, however, that the presence of institutional investors does not automatically translate into firmer market support.
Frigg also points out that the nearly $2 billion outflow from spot Bitcoin ETFs in May illustrates how institutions can also move to reduce risk during volatile periods. Therefore, while analysts regard the supply in loss as a key signal, most agree that the current level does not fully align with the deep bottoms of previous cycles.
In the coming weeks, market participants will be closely tracking whether this indicator moves any closer to its long-term descending threshold as Bitcoin’s price action unfolds.
