NextFin News - Bitcoin’s selloff this week pushed more than half of all circulating supply into unrealized loss. Glassnode data showed about 10.5 million BTC underwater as the price fell to as low as $61,300 on Thursday, according to CoinDesk.
Total circulating supply is roughly 20 million BTC, meaning the latest decline flipped the market’s profit-and-loss balance in a way that has historically shown up only in severe downturns. The same data showed supply in profit slipping to about 9.8 million BTC. CoinDesk said it is the first time in the current market cycle that bitcoin held at a loss has exceeded bitcoin held in profit.
The shift shows how broadly losses have spread among holders who bought at higher levels. In crypto markets, where leverage and momentum often amplify moves, a turn from broad unrealized gains to broad unrealized losses can quickly change investor behavior. Traders who had been sitting on paper profits tend to focus on preserving capital, while holders in the red often sell into rebounds to cut risk or raise liquidity.
Even so, the measure is not a prediction. It is backward-looking by definition, based on the price at which coins last moved onchain. It offers a read on entry costs, holder stress and market psychology, but it does not by itself determine whether the next major move is another breakdown or the start of a base.
The historical backdrop is why traders watch it. Under the Glassnode framework cited by CoinDesk, earlier periods when supply in loss overtook supply in profit tended to arrive in deep bear-market phases and often lined up with major bottoms. Bitcoin’s slide also brought the token to its 200-week moving average near $61,300, a long-term trend gauge that has repeatedly acted as support in earlier bear markets. A majority of supply underwater combined with a test of that long-duration support level is a rare combination.
Still, a stress signal is not the same as a floor. Bitcoin has gone through multiple cycles in which on-chain data pointed to severe damage before the market found a durable base. The stretch between those two points has often been messy. In some cycles, forced liquidations and thin liquidity pushed prices well below levels that had looked like obvious support. In others, the market moved sideways for months even after the worst of the drawdown had passed. The current reading fits that pattern of uncertainty: sellers have already inflicted meaningful damage, but there is no indication they are done.
The next key level sits lower. CoinDesk noted that if bitcoin falls below the psychologically important $60,000 level, the next major support zone is around $54,000, which corresponds to realized price — the average acquisition cost of all bitcoin in circulation based on the price at which each coin last moved onchain.
Realized price has mattered in previous bear markets because it marks the rough point where the market as a whole stops being comfortably profitable and starts feeling structurally underwater. A break below it would add to the sense that this move is more than a routine correction.
There is also a competing interpretation. Heavy unrealized losses have often helped set up recoveries by flushing out weak hands, resetting leverage and reducing the speculative excess that can leave markets vulnerable to sharp drops. When a large share of participants is already in loss, fresh bad news can have less marginal impact than it did near the top. For contrarian buyers, the distinction between capitulation risk and capitulation damage matters. But the data still do not support treating this as a clean buy signal.
This is one on-chain measure, not a full market verdict. It does not capture exchange liquidity conditions, derivatives positioning, ETF flows, macro risk appetite or whether long-term holders are distributing into weakness. It also does not show how much of the supply in loss is held by short-term traders versus conviction holders, a split that can shape how durable any eventual bottom turns out to be. For now, the simplest facts are these: more than 10 million BTC are underwater, bitcoin has returned to a long-term technical level watched across multiple bear cycles, $61,300 is the price that turned the on-chain balance, and $54,000 is the next level that could test how much pain the market is still willing to absorb.
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