Bitcoin Supply in Loss Begins to Rise, Flashing Early Bear Market Signal

Bitcoin is showing early signs of a structural shift as on-chain data suggests losses are beginning to spread across the market.

A key metric tracked by CryptoQuant, Bitcoin’s Supply in Loss (%), has started trending upward again. This move has historically aligned with the early stages of bear markets.

Key Points

• Bitcoin’s Supply in Loss is rising, an early on-chain signal often seen at the start of bear markets.
• The metric shows more holders going underwater, spreading losses beyond short-term buyers.
• In past cycles, this shift appeared well before Bitcoin reached its eventual market bottom.
• Loss levels remain below capitulation, but the trend hints at a broader downturn, not a dip.

What Rising Supply in Loss Means for Bitcoin

Supply in Loss measures the percentage of Bitcoin held at a price higher than the current market value. When this metric begins to rise, it indicates that more holders are underwater, not just recent buyers but increasingly longer-term participants as price weakness persists.

In past market cycles, this change in direction has marked the transition from bullish momentum into broader market stress, where selling pressure gradually expands beyond short-term holders.

Historical data shows a similar setup in previous cycles. In 2014, 2018, and 2022, Supply in Loss turned upward well before Bitcoin reached its actual market bottom. During those periods, the price continued to decline even after the signal appeared, with true bottoms forming only once losses spread much deeper across the network.

At present, the metric remains far below the extreme levels typically associated with full capitulation. However, the early directional shift itself is notable and suggests the market may still be in the early phase of a broader downturn.

Bear Market Structure, Not Just a Pullback

Rather than pointing to a short-term correction within an ongoing bull trend, the data hints at a possible transition into a bear market structure. If Supply in Loss continues to expand, it would strengthen the case that Bitcoin is entering a prolonged distribution phase rather than a quick recovery.

Essentially, on-chain indicators suggest caution. At press time, Bitcoin trades at $87,500, down 2.5% over the past day and 31% from its all time high.