On-chain data shows Bitcoin will end 2022 with a peak supply loss of 55%. Here’s how this value compares to the previous baseline.
About 55% Of The Total Bitcoin Supply Has Been Underwater Recently
According to CryptoQuant’s year-end dashboard release, this metric reached a value of 60% during the previous baseline. The “supply in loss” is an indicator that measures the percentage of the total Bitcoin supply that is currently in loss.
These metrics work by looking at the on-chain history of each coin in circulation to see the last price it moved. If the previous value for any coin is greater than the latest BTC price, then the coin will have a current loss, and the indicator states that.
The partner indicator is “supply in profit,” and the price can only be derived from the source in loss by subtracting from 100. Now, here is a graph that shows the trend in the supply of Bitcoin in loss over the past five years. :
The value of the metric seems to have been going up in recent months | Source: CryptoQuant
As the chart above shows, the supply of Bitcoin is increasing in value as the bear market continues. This trend naturally makes sense because with every pullback during a bear market, more investors enter the loss zone because many will get their coins during higher bull market prices.
In the current BTC cycle so far, the market has seen peak supply at a loss of around 55%, corresponding to the majority of coins in circulation underwater. From the chart, the indicator also sees an upward trend as the 2018-2019 bear market progresses, and rises above 60% as the price of BTC also hits a bottom.
In the case of the black swan of COVID in 2020 as well, the lost supply reached a fairly high figure and touched the 60% mark. It is clear that, even if all the prices have dropped significantly (in particular, the collapse of LUNA, the bankruptcy of 3AC, and the latest crash of FTX), the indicator will end 2022 without reaching that high.
If the current cycle follows the same pattern and forms a bottom around the 60% mark, then there is still time to go for metrics. And the only way that more supply will suffer losses is by decreasing prices, which means that 2023 will be painful for Bitcoin investors.
BTC price
At the time of writing, the price of Bitcoin is floating around $16,600, down 1% over the past week.
Looks like BTC has tumbled down over the last two days | Source: BTCUSD on TradingView
Featured images from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com