On-chain data indicates that the percentage of Bitcoin held at a loss has surged to nearly 20% following a recent downturn in the cryptocurrency’s price.
CryptoQuant analyst Axel Adler Jr. recently highlighted this trend in a post on X, focusing on the Bitcoin Unspent Transaction Output (UTXO) Supply in Loss indicator. This metric calculates the percentage of tokens that are currently being held at a net unrealized loss by examining the on-chain history of each UTXO in circulation to determine its last moved price. The cost basis for any UTXO is considered to be the price at which it last changed hands. When this cost basis exceeds the current spot price of Bitcoin, that UTXO is considered to be “underwater.”
Adler Jr. shared a graph that illustrates a sharp increase in the UTXO Supply in Loss. When Bitcoin hit its all-time high in March, this indicator plunged to zero, as all investors were in profit. However, as the cryptocurrency has experienced bearish trends over the past few months, the UTXO Supply in Loss has risen once more.
Currently, the 90-day moving average of this metric is approaching the 20% mark. In the accompanying graph, previous instances where the indicator reached this level were noted. “In previous cycles, similar conditions were sometimes followed by a price rally,” Adler Jr. commented, suggesting that Bitcoin’s price could potentially surge again.
The increase in UTXO Supply in Loss might actually be a bullish sign for Bitcoin. Investors who are in profit are typically more inclined to sell. Therefore, when the number of profitable investors decreases, the likelihood of a widespread selloff diminishes, potentially stabilizing or even boosting the price.
As Bitcoin’s UTXO Supply in Loss climbs, market watchers are now speculating on whether a rally could be on the horizon, drawing from historical patterns that indicate potential bullish momentum in similar conditions.