On-chain data shows the amount of Bitcoin supply in loss has now reached levels similar to during the COVID crash and the 2018 bear market bottom.
Bitcoin Supply In Loss Spikes Up Following The Latest Crash
As pointed out by an analyst in a CryptoQuant post, the BTC supply in loss has set a new record for this year following the FTX disaster.
The “supply in loss” is an indicator that measures the total amount of Bitcoin that’s currently being held 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 moved at.
If this previous price for any coin was more than the current BTC value, then that particular coin is in some unrealized loss right now, and the indicator accounts for it.
Now, here is a chart that shows the trend in the 7-day moving average Bitcoin supply in loss over the history of the 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 above graph, the Bitcoin supply in loss has sharply risen up over the last couple of days as the price of the crypto has observed a deep crash.
The current loss value is a new record for the 2022 bear market, and is also in fact the highest the indicator has been since the COVID black swan event back in 2020.
Notably, the amount of underwater supply in the market was also at similar levels back in late 2018, when the bear market of that cycle set its bottom.
If the same trend as in those previous bottoms follows now as well, then the latest high loss values may imply the market has now declined deep enough for a bottom.
However, even if the pattern does follow, it doesn’t mean pain might be over for the investors. As is apparent from the chart, in the 2018-19 bear the market moved mostly sideways after the bottom, and also formed another peak of similar loss values, before some bullish wind returned to Bitcoin.
At the time of writing, Bitcoin’s price floats around $16.4k, down 18% in the last week. Over the past month, the crypto has lost 15% in value.
The below chart shows the trend in the price of the coin over the last 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
Image and article originally from www.newsbtc.com. Read the original article here.