Bitcoin Flashes ‘Warning Sign’ With Nearly Half of BTC Supply Sitting at a Loss: Report

Holders of approximately 9.4 million Bitcoinor about 47% of the total circulating supply, suffer from unrealized or paper losses, according to a new report from CEX.io Research.

That includes more than 30% of Bitcoin held by long-term holders, or $304 billion of the largest crypto asset, which is now underwater – the highest share since 2023, according to the report.

“Long-term holders are now selling at their biggest losses in three years, and the speed of the turnaround signals a sharp deterioration in confidence,” the report said.

“The broader context makes this more worrying,” analysts added. “The price of Bitcoin has risen slightly in recent weeks, but the share of long-term holders making a profit has been quietly shrinking at the same time.”

Bitcoin has been roughly flat over the past 24 hours, recently changing hands around $66,567, but is down about 6% in the last week of trading. possible escalation of the conflict in Iran has grown.

According to him, the shift in circumstances has led Bitcoin to a shaky place CEX.io. The company’s Bitcoin Impact Index, which measures Bitcoin holders and their stress levels when it comes to selling, has risen to ‘high impact’. In other words, there is significant tension among Bitcoin holders and institutional capital.

“This type of divergence between price action and on-chain belief has historically been a warning sign,” the report says. “For example, similar moves occurred in mid-2018 and mid-2022, before the price fell by more than 25%.”

Another 25% drop would put Bitcoin below $50,000 for the first time since February 2024. At the time of writing, Bitcoin is currently down about 47% from its all-time high of $126,080 in October.

The CEX.io Research shows that the new setup resembles the period in late January, which preceded the sharp drop in Bitcoin prices from the mid-$90,000s to the low $60,000s in early February.

“The difference this time is that holders of Bitcoin are not yet rushing to exchanges to sell. That has kept the worst moments of February from getting worse, and that is happening now,” the report said, adding that if the rate stays this way, prices could stabilize instead of falling further.

The tentative analysis is similar to that recently shared by VanEckwhich indicated “unusually strong demand” for Bitcoin downside protection. Earlier this year, CryptoQuant suggested as much BTC’s True Bear Market Bottom the price would be closer to $55,000, while Standard Chartered said it would reach $50,000 before returning to $100,000.