46% of Bitcoin’s supply is now underwater: Will BTC’s losses keep mounting?

Since falling from its $126k peak, Bitcoin [BTC] has traded within a descending channel, with sellers cashing out every gain.

In fact, as of this writing, the king coin traded at $66,689, down 20% on the monthly chart and 47% from its ATH. 

With Bitcoin stuck within a prolonged bearish trend, investors and all market participants are facing significant losses. 

46% of the Bitcoin supply is now at a loss

Based on Bitcoin’s Realized Price UTXO Age Bands, most holders have held BTC for more than a month at a loss. 

The realized price for 1-month holders now sits around $69k, while the 1-month to 3-month cohort sits around $90k. With Bitcoin now significantly below these levels, all these positions are in the red. 

As a result, Bitcoin’s supply trading at a loss has increased extensively. According to Maartun, approximately 9.09 million bitcoins are now in the red, representing about 46% of the circulating supply. 

These losses are spread across both short-term and long-term holders. Checkonchain data showed that short-term holders’ unrealized loss currently sits around $113.9 billion. 

At the same time, long-term holders’ unrealized losses currently hold around $140 billion. The sustained rise in losses indicates a strong bearish trend prevailing in the market. 

Usually, higher loss rates create a sell-pressure risk if holders panic and capitulate, fearing further losses. In fact, on the 2nd of March, realized loss jumped to $705 million, according to Checkonchain.

Strategy and DATs count more losses

With losses mounting across the market, Strategy [MSTR] and other institutional investors are now operating underwater.

While MSTR has continued to accumulate during this bear market, raising its holdings to 717,724, the DCA strategy has done nothing to help.

As such, with an average cost basis of $76k, 67% of Strategy’s Bitcoin stack is in the red. The firm’s holdings value fell from a $79 billion peak to $47 billion at press time.

The same holds for the entire Digital Asset Treasuries holding BTC, with the total value of holdings falling from $125 million to $73 million.

What the continued losses mean for BTC

Traditionally, rising losses have preceded bearish implications for the market. Holders tend to capitulate, reducing risk exposure, which causes higher selling pressure.

Often, higher pressure accelerates downside risk, leading to lower prices, as recently observed. Currently, the market is in a strong downward momentum, as evidenced by momentum indicators.

Looking at the Relative Vigor Index (RVGI), which is now in negative territory, suggests higher selling and less buying activity. Such market conditions create room for more losses on the crypto’s price charts.

This possibility is further evidenced by the Future Grand Trend indicator, as it pointed to a slip below $60k to $59,213.

Even more concerning is that, per the FGT, BTC is likely to continue trading within a descending channel, with $45k as the bearish case.

Final Summary

• Bitcoin losses have surged, with approximately 9.09 million BTC, or 46% of the Bitcoin supply, currently in the red. 
• BTC continues to trade within a descending channel, down 20% the past 30 days.