The recent sharp correction in Bitcoin has pushed over half of its circulating supply into a state of loss.
With Bitcoin currently trading around $61,000—down roughly 50% from its all-time high and having recently broken below its 200-week moving average for the first time in years—a growing number of holders are seeing their positions turn unprofitable.
According to statistics from K33 Research's Vetle Lunde, more than 50% of Bitcoin is now trading below its purchase price, marking the first time this has occurred since late 2022.
Just one month ago, this figure stood at only 30%.
This is the latest sign of pressure for a market already entrenched in a months-long downtrend.
Since October of last year, Bitcoin and numerous other tokens have faced sustained selling pressure, with almost no positive catalysts to halt the decline.
Last week, the world's largest cryptocurrency fell to its lowest level of 2024, erasing all gains made since the beginning of the Trump administration, which had been fueled by crypto-friendly policies.
The latest wave of selling was triggered when MicroStrategy Inc., a company that holds Bitcoin as a treasury asset, announced the sale of a small portion of its tokens.
Given the company's significance within the crypto ecosystem, this move sparked concern among traders.
K33 also noted that outflows from Bitcoin-focused exchange-traded funds (ETFs) have accelerated, while volatility has surged to a three-month high.
For Bitcoin holders—whether long-term or short-term—the recent period has been particularly challenging.
Ophelia Snyder, co-founder of asset management firm 21Shares, stated, "Price volatility stems from structural positioning, leverage, emotional reactions, and event-driven risks, but the macro backdrop reflects persistent market conditions. Until these fundamental conditions change, I believe the market is likely to continue exhibiting a similar pattern: range-bound trading, intermittent volatility, deleveraging, and many investors waiting for the next truly significant catalyst."
The implications extend far beyond paper losses.
Bitcoin's strongest historical rallies have relied on continuously attracting new buyers willing to pay higher prices than the previous cohort of investors.
When over half of the supply is underwater, the market begins to face selling pressure from millions of disappointed holders who bought during last year's frenzy.
This dynamic can itself create a headwind.
Investors suffering from deep unrealized losses often view price rebounds as an opportunity to exit positions rather than add to them, creating a potential source of selling pressure.
Concurrently, a prolonged price slump could damage one of Bitcoin's most valuable assets: its reputation as a trade for the "patient."
With each month spent far from its highs, a new generation of investors may increasingly associate cryptocurrencies with missed opportunities rather than outsized gains—especially as capital flows toward faster-moving narratives in the market, such as AI chip manufacturers.
Michael O'Rourke, Chief Market Strategist at JonesTrading, remarked bluntly, "After 17 years of development, Bitcoin still has no practical use case beyond pure speculation."
On the surface, developments in the crypto space appear constructive, contrasting with the market's own anxiety.
The Trump administration has adopted a crypto-friendly stance, actively promoting various regulatory measures to bring related products closer to the mainstream.
Traditional financial institutions have also grown more accepting as the investor base expands.
Various projects are finally beginning to launch on crypto infrastructure—a vision long championed by digital asset proponents.
However, the reality is considerably bleaker.
According to compiled market data, a basket of Bitcoin ETFs trading in the US has seen cumulative outflows of approximately $5.5 billion over the past month, further pressuring spot prices.
Meanwhile, a report from Cantor's digital asset research team shows that total trading volume on centralized exchanges last month fell sequentially to $4 trillion, marking the second consecutive month at its lowest level in nearly two years.
Amid this deluge of negative news, K33's Lunde may have identified a glimmer of hope.
Historically, the state where half of Bitcoin trading is underwater has only appeared near major bear market bottoms, "as selling pressure from profitable holders increasingly exhausts itself."
Lunde wrote in a report that in the past, Bitcoin has often bottomed within weeks of breaching this level, though a "final capitulation" phase cannot be ruled out.
He stated, "While not an absolute guarantee, the current setup implies limited downside potential relative to upside over the coming year, which strengthens the contrarian bullish case."
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