Nearly a quarter of Bitcoin supply currently trades below its acquisition cost, with long-term holders now controlling 43% of underwater positions. Data shows the cryptocurrency has maintained 6 to 7 million BTC in loss territory since mid-November, marking the highest sustained loss levels since 2023.

What Happened: Market Analysis

The Bitcoin Total Supply in Loss—measuring coins held below their last transaction price—reached 6.7 million BTC as of mid-December, representing 23.7% of circulating supply. Price declines in November triggered the initial surge in underwater positions.

The distribution between holder types has shifted substantially. Short-term holders, defined as addresses active within 155 days, now control 13.5% of total supply at a loss. Long-term holders account for 10.2%.

"Persisting within the 6–7 million BTC range since mid-November, this pattern closely mirrors early transitional phases of prior cycles, where mounting investor frustration preceded a shift toward more pronounced bearish conditions and intensified capitulation at lower prices," Glassnode stated in its weekly report.

Also Read: SEC Clarifies Custody Requirements for Broker-Dealers Holding Tokenized Securities

Why It Matters: Cycle Transition

The metric's sustained elevation suggests structural market changes rather than temporary volatility. Historical patterns from previous cycles show similar loss distributions preceded extended bearish periods.

Recent buyers' positions have begun aging into long-term holder status while remaining underwater.

"This distribution suggests that, much like in prior cycle transitions into deeper bearish regimes, loss-bearing supply accumulated by recent buyers is gradually maturing into the long-term holder cohort," the analytics firm noted.

Read Next: XRP Ledger Amendment Blocks Nearly Half Of All Servers Over Upgrade Delays