After days of steep downward movement, Bitcoin’s price appears to have found a somewhat reliable anchor around the $60,000 region. However, recent on-chain data suggests that the premier cryptocurrency may not remain stagnant for long, with a bullish reversal seemingly looming.
Is a BTC price floor already forming?
In a June 7 post on the X platform, crypto analyst Ali Martinez said revealed that the price of Bitcoin may have reached a significant low in this cycle. This evaluation is based on changes to the Bitcoin Supply In Loss metric, which measures the amount of BTC in circulation that was last moved at a price above the current market value.
This on-chain metric provides insight into the pressure investors are under (or how deep they are underwater) while holding their Bitcoin at an unrealized loss. Therefore, the Supply In Loss indicator, near unprecedented levels, is a signal of systemic fear and an impending shift in Bitcoin market dynamics.
Martinez noted that the flagship cryptocurrency has formed major cycle bottoms in the past when more than 10 million BTC was held at a loss. According to Glassnode data highlighted by the analyst, Bitcoin has crossed this threshold, with 10.46 million coins (more than half of the circulating supply) underwater.
As seen in the chart above, Bitcoin price experienced a bullish reversal in late 2018, when supply crossed this 10 million threshold at a loss. A similar pattern was seen for the price of BTC when the supply climbed to this level at a loss around 2022.
Martínez explained:
I believe this is an important signal, as selling pressure often begins to wane as fewer investors are willing to realize losses, increasing the likelihood of a bottom drop.
Based strictly on historical context and patterns, there is a good chance that a BTC price bottom will form at current levels. An important factor to ignore, however, is that circulating Bitcoin supply was significantly lower in both periods (about 17.4 million and 19.2 million by the end of 2018 and 2022, respectively).
Lower circulating supply could mean that supply at a loss could be slightly higher this time around, indicating that the BTC price could fall further. This was clearly visible in 2015 (when circulating supply was much lower), when supply at a loss did not reach the 10 million threshold before a bullish reversal occurred.
Bitcoin price at a glance
At the time of writing, BTC’s price stands at around $62,746, reflecting a 2.5% increase in the past 24 hours.