45% Of Circulating Bitcoin Is Underwater...Selling Wall At Every Rebound [Bitcoin Now]

Nearly half of all circulating Bitcoin is now trading below its purchase price, putting a large share of investors in loss-making territory. This has severely dampened investor sentiment, and at every rebound, a wave of selling from loss-making holders is being unleashed. As selling pressure grows, the buying base is weakening, leading analysts to say that Bitcoin’s upward momentum is failing to gain traction.

According to research firm Glassnode on the 24th (local time), about 9 million Bitcoins currently in circulation, or 45% of the total supply, are trading below their holders’ purchase prices. Based on the recent low of about 62,800 dollars, as many as 10 million Bitcoins were at one point in loss territory. Bloomberg analyzed that this deterioration in buying sentiment is not a temporary shock but a phenomenon that has spread broadly across the market.

Bitcoin is currently down about 50% from its peak of above 126,000 dollars reached on October last year. This correction has not been a sharp, short-term plunge; instead, the price has successively surrendered the 100,000?, 90,000?, and 80,000?dollar levels. Unlike in the past, there has been no scene of a violent capitulation sell-off forming a clear bottom and drawing in fresh buying interest.

Bloomberg assessed that these ongoing losses have significantly weakened buyers’ willingness to re-enter the market. It added that the main indicators now visible suggest that the market’s recovery mechanism has been structurally disabled.

Glassnode data show that from the 1st to the 22nd of this month, 19 days recorded net losses. This means there were more investors selling below their purchase price than above it. Analysts say this is not a simple consolidation phase but a situation in which investors are locking in losses day after day. Such selling has a cumulative effect, because loss?realizing sellers are investors who might otherwise have become future buyers but are instead being removed from the market.

Each time a rebound occurs, the market also runs into a wall of selling from those who bought near the top. These investors see the move not as a bottoming pattern but as an opportunity to escape. As a result, the higher the rebound, the lower the ceiling becomes, and each rally grows shorter, shallower, and weaker.

Roxanna Islam, Head of Sector and Industry Research at TMX VettaFi, said, "Bitcoin is currently in a very uncertain environment, and we are seeing a pattern where every small rebound is used as an opportunity to secure liquidity."

In addition, the forces that once drove Bitcoin to its peak - inflows into exchange?traded funds (ETFs), accumulation by large holders, leveraged speculation, and Wall Street’s entry, which had fostered expectations that structural risk had declined - are now working in reverse. Money is flowing out of ETFs. Large?scale holders have turned to selling. Leverage has been sharply reduced. As a result, whenever the market rebounds, loss?making investors are increasingly treating those moves as opportunities to sell near their breakeven levels and exit.

According to Bloomberg’s compiled data, spot Bitcoin ETFs have seen about 3 billion dollars in net outflows so far this year. Many ETF buyers are also sitting on significant unrealized losses. Glassnode estimates their average purchase price at 83,956 dollars, leaving them with an unrealized loss of about 23% at current levels.

Michael O’Rourke, Chief Market Strategist at JonesTrading, said, "The launch of Bitcoin ETFs significantly broadened the investor base and helped fuel the rally," but added, "These investors are less committed to the asset."

Even so, Bitcoin has a track record of setting new all?time highs after multiple collapses. Within the industry, there are still many who remain optimistic. Brett Munster of Blockforce Capital pointed out that, although there have been outflows from Bitcoin ETFs recently, the scale is limited compared with the total amount of money that had flowed in before the latest downturn began. In a report, he noted that the total amount of Bitcoin held by ETFs has fallen only 6% from last October’s peak. Given that the price has dropped 50%, the reduction in holdings is not large, he argued.

However, the key question facing the market is not simply whether Bitcoin can find a bottom. The real issue is whether the badly damaged buyer base can recover before continued selling exhausts even the last remaining optimists. The very investors who would be needed to drive the next leg higher are instead trying to leave the market.

One of the most worrying signals is the behavior of so?called "whales," or large?scale holders. These are early investors who accumulated substantial holdings before Bitcoin became widely known to the public. Glassnode data show that whales have recently turned to net selling, unloading more than 43,000 Bitcoins in just the past week alone.

Sean Rose, a researcher at Glassnode, said, "The data show that loss realization is continuing during every rebound phase," adding, "Holdings accumulated at higher price levels are being dumped each time the market bounces." He stressed, however, that this pattern is less a signal that predicts the future and more a phenomenon driven by investor psychology.