Bear Cycle Warning: Bitcoin Rising Supply Losses Simulate 2022 Pre-Calculation Phase
Bitcoin is currently hovering around the $70,000 level as the market continues to trade sideways following several weeks of volatility. Price action has remained stable in recent sessions, with buyers and sellers struggling to find a clear direction while purchases across the crypto market remain sluggish.
Although high-level price movements suggest a balancing period, on-chain data shows that underlying market pressure may be building gradually. A recent report from CryptoQuant highlights a renewed increase in Bitcoin’s Supply in Loss metric, which measures the percentage of BTC in circulation currently held at a loss relative to its acquisition value.
According to the data, Bitcoin Supply in Loss is again approaching the 40-45% range. Historically, this area tends to be seen during market cycle changes, especially during bear market developments or extended correction periods.
Previous cycles provide a useful point of reference. In 2015, 2019, and 2022, the increase in the share of coins held at a loss coincided with periods of increased market pressure. As more investors move into negative territory, selling pressure tends to intensify as participants see losses or reduce exposure amid uncertain market conditions.
Rising Asset Losses Point to Increasing Market Pressure
The report also highlights a broader structural signal emerging from Bitcoin’s current consolidation. As the Supply in Loss metric continues to rise, a growing portion of the market is starting to hold coins at a price below their acquisition cost. Historically, this variable reflects the structure of fragile markets, as many investors find themselves in negative positions.
When a large portion of the circulating supply goes into waste, mental pressure tends to rise. Some investors may hold and sell, while others choose to hold the decline. This tension between forced sales and long-term convictions often defines the middle stages of market corrections.
However, historical data suggests that the current level may not represent the worst phase of the market depression. In previous cycles, major bear markets typically only formed when Supply in Loss extended above 50% of Bitcoin in circulation. Those times coincided with widespread support, where most recent buyers were underwater.
Currently, the metric is approaching the 40–45% range indicating that pressure is increasing but not yet at levels historically associated with cyclical downturns.
If previous patterns repeat, the current position may represent the early stages of a broader bearish phase than the final bottom of the market cycle.
Bitcoin Consolidates Below Key Moving Averages After Sharp Correction
Bitcoin continues to trade near the $69,000–$70,000 region following a sharp correction that occurred earlier this year. The 3-day chart shows BTC trying to stabilize after a quick decline that pushed the asset from $90,000 down to the $60,000–$65,000 area in February, where buyers stepped in briefly to contain the selling pressure.
Despite recent iterations, the broader framework remains technically fragile. Bitcoin is currently trading below its short-term and medium-term moving averages, including the 50- and 100-period trends, which are now trending lower and acting as resistance to the upside. This alignment usually shows weak momentum after a strong upward cycle.
The long-term moving average of 200 near the $90,000 region remains the most important structural level above the market. Losing this trend line early in the correction ensured a move from the expansion phase to a broad consolidation or correction zone.
In the short term, price action suggests that Bitcoin is making a range between $65,000 and $72,000. The lower boundary of this area served as support during the recent pullback, while repeated attempts to push above the $72,000 level have struggled to find sustained momentum.
Until Bitcoin regains the $75,000–$80,000 area, the chart suggests that the market will likely remain in a consolidation phase.
Featured image from ChatGPT, chart from TradingView.com
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