• Bitcoin has reached a peak supply in loss of 55% at the end of 2021, according to CryptoQuant’s year-end dashboard release.
• This metric measures the percentage of the total circulating Bitcoin supply that’s currently carrying some loss.
• The Bitcoin supply in loss has increased in value as the bear market has become longer.
Bitcoin has been through a roller-coaster of price movements in 2021. After a strong start to the year, the cryptocurrency market took a nosedive in the spring and has remained in a bear market ever since. Despite this, Bitcoin (BTC) has been able to hold on to its gains from the start of 2021, and it looks set to end the year in a strong position.
On-chain data shows that Bitcoin is about to end 2022 with a peak supply in loss of 55%. This metric is an indicator that measures the percentage of the total circulating Bitcoin supply that’s currently carrying some loss. It works by looking at the on-chain history of each coin in circulation to see what price it was last moved at. If this previous value for any coin was greater than the current BTC price, then that particular coin is carrying some loss at the moment, and the indicator accounts for it.
As per CryptoQuant’s year-end dashboard release, this metric reached a value of 60% during previous bottoms. The counterpart indicator is the “supply in profit,” and its value can simply be derived from the supply in loss by subtracting it from 100.
Now, here is a chart that shows the trend in the Bitcoin supply in loss during the last five years:
The value of the metric seems to have been going up in recent months | Source: CryptoQuant
As the above graph displays, the Bitcoin supply in loss has increased in value as the bear market has become longer. This trend makes sense as with each drawdown during a bear, more investors enter into the loss territory as a large amount of them would have acquired their coins during the higher, bull market prices.
In the current BTC cycle so far, the market has seen a significant influx of fresh money and the supply in loss is steadily increasing. This is an indication that more and more investors are betting on the cryptocurrency’s long-term prospects.
It remains to be seen how the Bitcoin supply in loss will evolve in the coming months, but the current trend suggests that the cryptocurrency could be in for a strong end to the year. With the new influx of capital, the demand for Bitcoin should remain strong and the losses should continue to diminish as the market recovers.