 ▲ Bitcoin (BTC) decline / AI-generated image © |
Bitcoin’s prolonged downtrend, which seemed to have no end in sight, may have finally entered its last phase of bottom formation, drawing heightened attention from investors. Nearly half of the total supply has fallen into loss territory, and classic indicators typically seen near the lowest points of past crashes are once again emerging.
According to crypto-focused media outlet Bitcoinist on February 27 (local time), on-chain analytics firm Glassnode stated in its latest weekly report that the current market appears closer to a bottoming phase than to the early stages of a bear market, citing the Total Supply in Loss metric. This indicator measures the amount of supply held at unrealized losses on the blockchain and is directly linked to the level of investor distress.
Last October, when Bitcoin reached an all-time high, this metric had virtually converged to zero. However, as the market sharply reversed into a downtrend, a significant volume of coins moved into loss territory, causing the indicator to surge steeply. The 7-day moving average of the metric has now reached 9.2 million BTC, the highest level since the end of the previous bear market. Considering that the current circulating supply stands just under 20 million BTC, nearly 50% of the total supply is now underwater.
Glassnode explained that this phenomenon closely aligns with past bear market environments in which asset values declined by around 50% and investors faced widespread financial stress. In particular, the current structural pattern of the indicator more closely resembles the later stages of a bear market rather than its initial phase. Historically, as the volume of coins held at a loss expands, selling pressure for profit-taking tends to become exhausted, increasing the probability of a market bottom. During the severe bear markets of 2018 and 2022, Bitcoin reached its lowest points when this indicator peaked.
Although the current metric has not yet fully reached the absolute peak levels observed at previous cycle bottoms, its recent sharp rise has brought it close. Glassnode assessed that despite lingering volatility and fragility in the market, from a structural perspective it appears much nearer to a potential bottoming phase than to the early stages of contraction. Meanwhile, Bitcoin reclaimed the $69,000 level last Wednesday but has since undergone a modest correction and is currently trading near $67,300.
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