Is Bitcoin Near a Cycle Bottom as Supply in Loss Reaches 40.6%?

TLDR:

• Bitcoin supply in loss stands at 40.6%, showing rising market stress but below past cycle bottom zones.
• CryptoQuant data shows cycle bottoms historically formed at higher loss levels that have gradually declined.
• Analysts link lower loss thresholds to stronger long-term holders, ETFs, and institutional participation growth.
• ETF outflows and market shifts show institutions can still reduce exposure despite long-term accumulation trends.

Bitcoin supply in loss has climbed to 40.6%, drawing attention from market analysts tracking long-term cycle bottoms.

Data shared by CryptoQuant shows the metric remains below historical capitulation levels but is approaching a zone that has repeatedly coincided with attractive accumulation periods.

While the current reading reflects growing market stress, analysts note that Bitcoin’s changing ownership structure may be reducing the level of losses required to form cycle lows.

Bitcoin Supply in Loss Approaches Historic Trendline

CryptoQuant analyst MorenoDV stated that Bitcoin’s Supply in Loss metric currently stands at 40.6%. The indicator measures the share of circulating Bitcoin held below its acquisition cost.

According to the analysis, the metric has followed a declining pattern since 2015. Every major cycle bottom occurred when Supply in Loss reached the upper boundary of a descending trendline.

Earlier market cycles required deeper drawdowns to establish bottoms. During the 2015–2016 cycle, more than 60% of supply was underwater. Similar conditions appeared during the 2018–2019 and 2020–2022 bear market lows.

MorenoDV noted that each successive cycle bottom formed with a lower percentage of holders in loss. The analyst argued that this structural shift reflects changes in Bitcoin’s market composition over time.

Market Maturity Changes Historical Bottom Patterns

In a post shared by CryptoQuant, MorenoDV linked the trend to stronger long-term ownership. The analysis pointed to long-term holders, institutions, ETFs, and conviction-driven investors as factors behind the shift.

As a result, the market may no longer require 60% or more of Bitcoin supply to be underwater before a bottom forms. The descending trendline now places the historical threshold closer to the high-40% range.

The report stated that the current 40.6% reading signals meaningful market stress. However, it remains below the area that historically offered what the analyst described as maximum opportunity conditions.

Should Bitcoin continue consolidating or weaken further, the metric could move closer to the trendline. Previous encounters with that structure often aligned with periods of long-term accumulation.

Analysts Debate Whether the Bottom Is Already In

Crypto commentator Frigg also discussed the metric and agreed that the long-term pattern deserves attention. The commentator noted that roughly four out of ten Bitcoin holders currently sit below their entry price.

Frigg outlined previous cycle readings, citing approximately 63% underwater supply in 2015–2016, 59% in 2018–2019, and 53% during the 2022–2023 bottoming period. The steady decline suggests that fewer holders may need to be at a loss before market conditions stabilize.

At the same time, Frigg cautioned against treating institutional participation as a guarantee of stronger market support.

The commentator pointed to roughly $2 billion in ETF outflows during May as evidence that institutional investors can also reduce exposure during periods of uncertainty.

Both analyses focus on the same conclusion. Bitcoin supply in loss remains an important metric to watch, but current levels have not yet reached the historical zone that previously marked cycle lows.

Market participants are therefore monitoring whether the indicator continues moving toward the descending threshold in the coming weeks.

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