Over 10.5 million BTC now underwater! What are the key levels investors should watch?

Underwater supply overtakes profitable BTC

The total circulating supply of Bitcoin is estimated to be around 20 million BTC. Based on the latest market conditions, the quantity of Bitcoin held in profit has tumbled to approximately 9.8 million BTC. This marks the first instance in this cycle where the BTC supply at a loss outweighs the profitable supply. The data underscores that a broad segment of the market now holds Bitcoin bought at higher prices than current levels.

Glassnode’s data reveals that, for the first time in this market cycle, the amount of Bitcoin sitting at a loss has surpassed the amount in profit.

Historical analysis indicates that such crossovers between profitable and loss-making supplies typically occur during deep bear market phases, sometimes aligning with significant market bottoms. However, experts caution that this metric alone is a limited timing tool, as the length of such phases has varied substantially in different years.

Bear market cycle durations vary

In the 2015 bear market, the number of coins held at a loss and those held in profit remained nearly equal for about one year. In 2019, a similar pattern lasted roughly six months. When the COVID-driven crash hit in March 2020, this phase was over in about a month. In 2022, the same scenario repeated and persisted for nearly half a year.

This pattern links the current signal to previous cycle lows, yet it offers no certainty on how long Bitcoin might hover at lower price levels. Both the direction and the duration of the current bearish pressure remain unclear.

Spotlight on the $61,300 and $54,000 levels

Another factor heightening concern after the latest decline is Bitcoin’s contact with its 200 week moving average, now near the $61,300 mark. This indicator, based on the average price of the last 200 weeks, serves as a widely followed long-term trend gauge and has historically acted as a powerful support in prior bear markets.

Glossary: Realized price refers to the average acquisition cost of all circulating BTC based on the price at which each coin last moved on-chain. The 200 week moving average is a key technical indicator used to track Bitcoin’s long-term price trend and is closely monitored in the market.

Should Bitcoin dip below the psychologically important $60,000 threshold, the next major support zone emerges around $54,000. Notably, this level also coincides with the current realized price. Historically, Bitcoin has traded below its realized price in each major bear market at least once.

If Bitcoin slides below $60,000, the next significant support could be found near the realized price level around $54,000.

Market participants are increasingly watching these two price zones as they may determine whether sentiment worsens or a potential bottom is reached. Every previous market low has seen Bitcoin briefly fall below the realized price, making $54,000 a critical figure on investors’ radars.

Amid heightened uncertainty, the prevailing sentiment points to a cautious approach. Investors remain wary without clear signs of trend reversal or capitulation as seen in previous cycles.

The days ahead could prove pivotal, as holders weigh whether to cut losses or hold through further drawdowns. Meanwhile, technical and on-chain signals will be closely scrutinized for potential signs of a turnaround.