indicates the percentage of the total Bitcoin supply that is currently held at a price higher than the current market price. In other words, it shows the proportion of Bitcoin that, if sold at the current price, would result in a loss for the holders.
How it is Calculated:
- Current Market Price: The current trading price of Bitcoin.
- Historical Purchase Prices: The prices at which Bitcoin was bought by its current holders.
- Comparison: Each Bitcoin is compared to the current market price. If the current price is lower than the purchase price, that Bitcoin is considered to be "in loss."
Current Observations:
- Current Low Supply in Loss (%): At 16.31%, a relatively small portion of Bitcoin supply is at a loss. Historically, such levels suggest that most investors are in profit, which can lead to confidence in the market.
- Potential Implications: When the Supply in Loss (%) is low, it often means that fewer investors are under pressure to sell at a loss. This can reduce selling pressure and potentially provide a foundation for price stabilization or recovery.
Historical Context:
- Historically, periods with high Supply in Loss (%) (above 50%) have often coincided with market bottoms, as extensive losses can lead to capitulation and subsequent recovery.
- Conversely, low Supply in Loss (%) during periods of price increases can indicate that the market might be finding a local top, as more investors are motivated to buy at worse prices.
Written by Amr Taha
