Rising bitcoin supply loss signals deepening bearish phase in BTC market

Recent on-chain data highlights growing stress across the Bitcoin market, with bitcoin supply loss metrics flashing levels typical of bearish cycle transitions.

Glassnode data shows record loss-bearing supply in current cycle

On-chain analytics firm Glassnode reports that the Bitcoin supply currently sitting at a loss has climbed to 6.7 million BTC, the highest level of loss-bearing supply in this cycle. This spike comes as the BTC price trades below the key psychological level of $90,000 after a sharp crash that began last month.

According to Glassnode, this 6.7 million BTC pool represents 23.7% of the circulating supply now underwater. Moreover, the report breaks this down between investor cohorts: 10.2% is held by long term holders, while 13.5% belongs to short term holders. That said, these figures underline how both recent buyers and more established investors are exposed to unrealized losses.

Glassnode argues that this distribution mirrors previous cycle transitions into deeper bearish regimes. However, the firm notes that coins recently acquired at higher prices are gradually aging into the long-term investor cohort, suggesting that many participants are choosing to hold through drawdowns rather than capitulate immediately.

Investor frustration echoes prior cycle transition phases

The analytics platform highlights that the 67 million BTC range of coins at a loss, in place since mid-November, resembles early transitional phases of earlier cycles. In those periods, mounting investor frustration tended to precede a shift into more pronounced bearish conditions and heavier capitulation at lower Bitcoin prices.

Notably, the Bitcoin price has fallen back to levels last seen in 2024, effectively erasing its year-to-date gains. Moreover, Glassnode notes that this decline has left behind a dense supply cluster accumulated by top buyers between $93,000 and $120,000. This overhead supply could weigh on any relief rally.

The resulting supply profile signals a top-heavy market structure. Glassnode explains that recovery attempts are likely to meet strong selling pressure from previously trapped buyers in that price band, particularly in the early stages of a bearish phase when confidence remains fragile.

Key on-chain thresholds and risk of further downside

Glassnode stresses that as long as the Bitcoin price trades below the $93,000 3,120,000 range, the market will struggle to convert resistance into support. Furthermore, the firm highlights one crucial on-chain threshold: the Short-Term Holder Cost Basis, currently estimated at $101,500. This level reflects the average cost basis of recent buyers.

In Glassnode’s view, if BTC fails to reclaim this $101,500 threshold, the risk of additional corrective downside remains elevated. However, a decisive move back above that level could ease selling pressure from short-term market participants and signal a more constructive phase.

Against this backdrop, analysts are watching the evolution of bitcoin supply loss as a gauge of investor stress and potential capitulation. Historically, extreme readings in coins held at a loss have often coincided with later stages of bearish cycles, though timing inflection points remains challenging.

Spot market flows reveal uneven demand across exchanges

Beyond supply metrics, Glassnode examines spot market behavior using cumulative volume delta (CVD) across major trading venues. The firm observes periodic bursts of buy-side activity in spot flows, yet these have not developed into sustained accumulation, particularly during recent BTC price pullbacks.

The analytics provider notes that the Coinbase spot flows CVD remains relatively constructive, signaling steadier participation from US-based investors. However, conditions differ elsewhere: Glassnode highlights that Binance and aggregate bitcoin flow analysis show choppy, largely directionless behavior, hinting at uncertainty among global traders.

These dispersion points, according to Glassnode, reflect selective engagement rather than broad, coordinated spot demand. Moreover, they underscore how the current market environment lacks the kind of synchronized buying pressure usually seen during strong uptrends.

Derivatives and liquidity drive price action as spot demand lags

Glassnode also points out that the recent Bitcoin price declines have not triggered a decisive expansion in positive CVD across exchanges. This suggests that dip-buying remains tactical and short-lived, rather than signaling a durable shift toward accumulation.

In the absence of robust spot demand across all venues, Bitcoin‘s price action is increasingly reliant on derivatives activity and broader liquidity conditions. That said, any revival in spot accumulation could quickly change market dynamics by absorbing sell pressure from loss-making holders.

At the time of writing, Bitcoin is trading around $86,800, according to CoinMarketCap. The asset is up over the last 24 hours, yet remains well below the dense supply cluster created between $93,000 and $120,000, keeping investor focus firmly on loss metrics and on-chain support levels.

In summary, rising coins held at a loss, top-heavy supply between $93,000 and $120,000, and uneven spot flows across platforms paint a cautious outlook, with further downside risk persisting unless BTC can reclaim key on-chain thresholds.