Bitcoin Bottom Nears as 40% of Supply Enters Loss

As Bitcoin's price continues to drop amid the persisting market volatility, the leading cryptocurrency is close to reaching a historic level that has often marked Bitcoin's bottom in previous cycles. The Bitcoin bottom indicator has become more glaring after Bitcoin slipped below the major $70,000 mark, gradually flushing out the speculative traders who thought buying the top was a personality trait.

According to the latest on-chain data provided by Cryptoquant, over 40% of Bitcoin's circulating supply is currently held at a loss. Typically, Bitcoin's supply loss metric tracks how much of Bitcoin's supply is sitting below its purchase price. While the metric has continued to increase, it shows that many Bitcoin investors, including large holders, have watched their gains evaporate as their current Bitcoin stash is no longer worth the amount they accumulated. The usual cycle of "this time is different" appears to be operating on schedule.

The surge in Bitcoin's supply in loss comes as the asset suddenly lost support around the $70,000 level, with its price continuing to trade below that mark. While Bitcoin has continued to plunge, it is trading at $68,834 as of the time of writing, marking a decrease of 4.15% over the last 24 hours.

The data further shows that the increase in the ratio of Bitcoin supply in loss is bringing the asset closer to historic levels where the market has often bottomed out. The analyst revealed that previous Bitcoin bottoms have formed when the supply in loss hits about 60%, as seen in past market cycles. As such, the current metric appears to be mimicking the same pattern, and there are expectations that the market could bottom at this level, since the extremes seen in past cycles have gradually become less intense.

Nonetheless, the metric pointing at a possible market bottom soon has sent a bit of relief to investors despite the increasing loss percentage, as historical data suggests this stage is expected to show up when the market is closer to exhaustion and sellers are finally running out of dry powder.