Bitcoin Supply Sinks into Loss as Market Nears Bear Territory Amidst Macro Headwinds
Bitcoin Supply Sinks into Loss as Market Nears Bear Territory Amidst Macro Headwinds
A significant portion of Bitcoin's supply is now held at a loss, pushing the market closer to historical bear-phase conditions. Analyst Darkfost's charts reveal 43% of Bitcoin supply in UTXOs is underwater, leaving only 57% in profit—a stark contrast to the 75% typically seen during confirmed bull trends. This on-chain deterioration is compounded by an unfavorable macro backdrop, including surging oil prices driven by geopolitical tensions in the Strait of Hormuz, which are fueling inflation expectations and broader financial market stress. Historically, such conditions have been detrimental to volatile assets like Bitcoin. While signs of stabilization are noted, the analysis suggests the market could still move lower, potentially shaking out long-term holders and pushing more supply into loss.
Bitcoin Supply Under Pressure
The cryptocurrency market, particularly Bitcoin, is showing signs of stress as a growing share of its supply has fallen into a loss-making position. According to CryptoQuant contributor Darkfost, approximately 43% of Bitcoin supply held in unspent transaction outputs (UTXOs) is currently underwater, meaning just 57% remains in profit. This metric places the market significantly closer to historical bear-phase conditions than to a confirmed bull trend.
Darkfost's analysis highlights that historically, about 75% of the Bitcoin supply has been in profit during advancing bull markets. The current 57% level, where roughly one out of two investors is at a loss, indicates a shift towards a market correction, resembling structures seen during prior bear markets. While some signs of stabilization linked to the current consolidation phase are present, the analyst warns that further downside is possible, potentially pushing the share of supply in loss towards 45%—a level reached during previous bear market cycles.
Macro Backdrop Intensifies Pressure on Bitcoin
Compounding Bitcoin's on-chain challenges is an increasingly unfavorable macro environment for risk assets. Darkfost points to a significant rally in oil prices, gaining over 60% since the start of the year, driven by geopolitical concerns around the Strait of Hormuz. This critical shipping lane accounts for a substantial portion of global daily oil exports, making any disruption a direct catalyst for price hikes.
Higher oil prices, in turn, feed directly into inflation expectations and broader financial market stress. This combination has historically not favored speculative and volatile assets like Bitcoin. Periods when oil prices regain strength have often coincided with the end-of-cycle phases for Bitcoin, signaling geopolitical tensions that are not conducive to risk-taking or exposure to more speculative assets. The immediate future for Bitcoin, currently trading around $67,730, depends on its ability to rebuild its supply in profit and reclaim the 75% threshold, or if macro stress and further long-term-holder selling push the market deeper into loss territory.