Bitcoin Slumps 50% as 45% of Supply Turns Underwater
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Bitcoin's (BTC-USD) four-month drawdown from its October peak above $126,000 is beginning to show measurable strain across its investor base, with on-chain data suggesting a broad swath of holders are now underwater. The largest cryptocurrency by market value has been hovering around $62,800, leaving nearly 9 million Bitcoin roughly 45% of circulating supply valued below their acquisition price, according to Glassnode. At a recent low near that level, almost 10 million coins, effectively half the supply, were underwater. Rather than a single capitulation event that resets positioning, the move lower has unfolded in stages through $100,000, $90,000 and $80,000, a pattern that could be weighing on buyer psychology instead of clearing the market in one decisive flush.
Recent trading data reinforce that pressure. Of the first 22 days in February, 19 recorded net realized losses, meaning more holders sold below cost than above it, Glassnode figures show. That steady realization of losses may be limiting the market's ability to build momentum on rebounds, as rallies appear to meet supply from higher-cost holders seeking an exit closer to breakeven. Spot-Bitcoin ETFs, which previously broadened access to the asset class, have seen nearly $3 billion in outflows so far this year, based on data compiled by Bloomberg. Investors in those products entered at an average price of $83,956, implying average paper losses of about 23%, according to Glassnode, with more than 600 Bitcoin offloaded per day on average over the past week. As Michael O'Rourke of JonesTrading noted, the wider ETF-driven investor base that supported the run-up may also be less committed during downturns.
Positioning among larger holders appears to be shifting as well. Glassnode data indicate that whales have shed more than 43,000 Bitcoin over the past week, contributing to what Sean Rose described as persistent loss realization into rebounds rather than a single climactic selloff. The infrastructure that helped drive Bitcoin to $126,000 ETF inflows, accumulation by major wallets and leveraged speculation is now moving in reverse. Still, Brett Munster of Blockforce Capital has pointed out that ETF outflows remain modest relative to cumulative inflows before the latest decline, and total Bitcoin held by ETFs is down just 6% from the early October high despite a 50% price drawdown. The key question for investors is whether this damaged buyer base can stabilize before continued distribution potentially extends the current phase of weakness.
source: https://www.tradingview.com/news/gurufocus:428bf738a094b:0-bitcoin-slumps-50-as-45-of-supply-turns-underwater/