On-chain data indicates that a significant portion of the Bitcoin supply has its cost basis above the current spot price, which may influence volatility if BTC experiences a rebound.
Bitcoin Supply Overhang May Influence Volatility & Selling Pressure
As highlighted by CryptoQuant community analyst Maartunn in a recent post on X, over 6.6 million BTC is currently held above the latest spot price of the cryptocurrency. The pertinent on-chain indicator is the “Supply In Loss,” which, as its name suggests, tracks the total amount of Bitcoin that is presently carrying some net unrealized loss.
This metric analyzes the transaction history of each circulating token to ascertain the price at which it was last transacted on the blockchain. If the previous transfer price of any coin exceeds the current spot price, that particular token is deemed to be in a state of loss.
The Supply In Loss aggregates all coins meeting this criterion to provide a comprehensive view of the network. A complementary indicator, known as the Supply In Profit, reflects the supply of the opposite category.
Here’s a chart shared by Maartunn that illustrates the trend in Bitcoin Supply In Loss over the past few years:
As shown in the graph, the Bitcoin Supply In Loss shrank to zero when the asset reached its all-time high (ATH) above $126,000 in October. However, following the subsequent market downturn, the indicator’s value has surged.
Currently, around 6.6 million tokens of the cryptocurrency are trading below their cost basis, amounting to about a third of the total BTC supply in circulation. The recent peaks in Supply In Loss signify the highest level of market distress observed since 2023.
In another X post, the analyst has shared a chart for an additional Bitcoin indicator known as the UTXO Realized Price Distribution (URPD). The URPD provides insights into the price points at which BTC was last acquired across its historical levels.
The URPD chart reveals the distribution of Bitcoin supply that is currently in loss across various price levels. Some levels carry significant supply, while others are notably sparse.
In general, investors facing losses anticipate a retest of their cost basis to recover their investment. Once this occurs, many choose to exit, concerned that BTC may decline again soon. Such selling activity can create large supply clusters above the spot price, setting the stage for potential volatility.
With a substantial portion of the supply currently underwater, any move back to higher levels may encounter selling pressure for Bitcoin.
BTC Price
Bitcoin has seen a rebound over the past day, with its price returning to $88,600.
