Crypto’s Unrealized Losses Soar to $350 Billion Amid Liquidity Crunch

Crypto’s Unrealized Losses Soar to $350 Billion Amid Liquidity Crunch — What the Data Suggests

Recent data from Glassnode reveals that the unrealized losses in the cryptocurrency market have surged to approximately $350 billion, with Bitcoin contributing around $85 billion to this figure. As liquidity indicators decline significantly, the market appears to be entering a phase of heightened volatility that could influence price movements into early 2026. However, another dataset showing unrealized profits offers a more comprehensive view of investors' positions.

Key Takeaways

Unrealized losses in the crypto market have reached around $350 billion.
Bitcoin comprises approximately $85 billion of those losses.
Liquidity across the market is decreasing, indicating potential volatility ahead.
Unrealized profits indicate that long-term profitability remains strong despite short-term losses.
The situation resembles previous market conditions that preceded increased volatility.

Crypto’s unrealized losses surge to $350B as liquidity tightens — What data really shows

The Surge in Unrealized Losses Signals Market Stress

The unrealized loss heatmap has shown a significant increase in red areas across various assets, indicating that more wallets are now in underwater positions compared to earlier months. Currently, total unrealized losses are approaching the highest levels recorded throughout 2025.

Crypto unrealized losses

Source: Glassnode

Specifically for Bitcoin, the data aligns with historical trends where notable increases in unrealized losses tend to happen during times of:

Glassnode reports a troubling decline in liquidity across the board, characterized by reduced stablecoin activity, diminished market-maker depth, and falling spot trading volumes on major exchanges.

Analyzing Unrealized Profits for Context

When examining the unrealized profit data, a different aspect of the market's structure becomes evident.

Crypto unrealized profits

Source: Glassnode

Looking across the ecosystem, it’s observed that for Bitcoin, unrealized profits remain significantly higher than unrealized losses over a two-year timeframe. This indicates that:

The observed discrepancy—escalating losses coupled with substantial profits—is typical during late-stage bull-cycle corrections or mid-cycle consolidations.

Insights Into the Current State of the Crypto Market

When combined, the visuals of rising losses and dipping liquidity tell a specific story: increasing losses might signal short-term challenges, yet long-term profitability appears stable. Historically, markets typically experience severe structural issues when unrealized losses surpass profits—an occurrence that is not evident at present.

The underlying concern is the diminishing liquidity rather than a high number of underwater positions. With liquidity drying up, relatively minor buy/sell activities can result in significant price fluctuations.

As noted by Glassnode, the combination of rising losses and decreasing liquidity has often preceded notable volatility spikes in prior market cycles. Current market conditions mirror setups seen before:

However, should macroeconomic tightening resume or if unique crypto-specific triggers occur, the losses might intensify before a stabilization can take place.

Conclusion

The current state of the crypto market is characterized by a troubling increase in unrealized losses amidst shrinking liquidity. While risks persist, the long-term perspective remains promising as unrealized profits continue to outweigh these losses. Market participants should remain vigilant as the situation evolves, aware that even minor shifts in liquidity can lead to significant volatility.