Bitcoin Supply Overhang: 6.6 Million BTC Purchased Above Current Price

On-chain data indicates that a significant portion of the Bitcoin supply is held at a price higher than the current market value, which may influence market volatility if BTC prices surge.

Key Takeaways

Over 6.6 million BTC is currently held above the latest market price.
The "Supply In Loss" metric indicates significant unrealized losses among Bitcoin holders.
A large amount of Bitcoin supply is currently underwater, representing potential selling pressure.
Bitcoin's price showed a slight recovery, currently standing at $88,600.

Bitcoin

Understanding Bitcoin's Supply Overhang and Its Potential Impact

CryptoQuant analyst Maartunn recently highlighted that over 6.6 million BTC is currently priced above the latest market value of Bitcoin. This observation is based on an on-chain indicator known as “Supply In Loss,” which reflects the total amount of Bitcoin currently carrying an unrealized loss.

This metric operates by analyzing the transaction history of each Bitcoin in circulation to determine its last transaction price on the blockchain. If a Bitcoin's previous transfer price exceeds the current market price, it is classified as being in a state of loss.

The Supply In Loss calculates the total number of Bitcoins fitting this definition, while its counterpart, Supply In Profit, tracks the opposite scenario.

The following chart shared by Maartunn illustrates the trend of Bitcoin Supply In Loss over the last few years:

Bitcoin Supply In Loss

The graph reveals that the Bitcoin Supply In Loss dropped to zero when the asset reached its all-time high (ATH) of over $126,000 in October. However, with the subsequent market correction, the indicator has increased significantly.

Currently, around 6.6 million BTC are valued below their cost basis, which is about one-third of the total Bitcoin supply in circulation. This recent spike in the Supply In Loss represents the most significant distress in the market since 2023.

Additionally, the analyst shared another Bitcoin indicator, the UTXO Realized Price Distribution (URPD), which shows the last purchase price of Bitcoin at various historical levels.

The URPD chart demonstrates how the Bitcoin supply that is currently at a loss is distributed across different pricing levels. Some levels exhibit a high concentration of supply, while others are notably sparse.

Investors holding coins that are currently at a loss are typically eager to see their investments return to their cost basis in order to break even. Once this recovery happens, many of them might choose to sell, anticipating a potential decline in BTC prices again. This behavior can result in significant selling pressure near clusters of supply above the current spot price, creating potential volatility points.

Given that a considerable portion of Bitcoin's supply is presently at a loss, a move back to higher price levels could encounter selling resistance.

Current BTC Price

Bitcoin's price has shown some recovery over the past day, rebounding to $88,600.

Bitcoin Price Chart