On-chain data shows that Bitcoin supply at a loss has now reached levels similar to the lows of the COVID crash and the 2018 bear market.
Bitcoin supply surges in losses after latest crash
As told by an analyst at Cryptoquant PostLosses BTC supply set a new record for the year after the FTX disaster.
“Supply in Loss” is an indicator that measures the total amount of bitcoin that is currently at some loss.
This metric works by looking at the on-chain history of each coin in the circulating supply to see what price it was last carried.
If this previous price for a coin was higher than the current BTC price, then that particular coin is still at some unrealized loss, and the indicator is responsible for it.
Now, here is a chart that shows the trend in the 7-day moving average bitcoin supply at losses in the history of crypto:
The 7-day MA value of the metric seems to have been pretty high in recent days | Source: CryptoQuant
As you can see in the graph above, the supply deficit of bitcoin has grown exponentially over the past few days as the price of the crypto has seen a deep crash.
The current loss price is a new record for the 2022 bear market, and in fact also the highest indicator since the COVID Black Swan event in 2020.
Notably, the underwater supply volume in the market was also at a similar level at the end of 2018, when the bear market of that cycle set its bottom.
If the trend continues as in those previous bottoms, the latest high loss values could mean that the market has now plunged deep enough for a bottom.
However, if the pattern follows, it doesn’t mean that the pain may be over for investors. As is evident from the chart, the bear market in 2018-19 mostly went sideways after a downtrend, and also made another peak of similar loss values, before returning to some strong wind in Bitcoin.
At the time of writing, bitcoin is priced around $16.4k, down 18% over the past week. In the past month, the crypto has lost 15% in value.
The chart below shows the coin’s price trend over the past five days.
Looks like the value of the crypto has recovered a bit since the crash below $16k | Source: BTCUSD on TradingView
Featured image from Jonathan Borba on Unsplash.com, charts from TradingView.com, CryptoQuant.com