Bitcoin's latest retreat has been so severe that it has pushed more than half of its circulating supply into loss-making territory. With the cryptocurrency trading around US$61,000 — down about 50 per cent from its record highs — and a fresh break below its 200-week moving average, losses are mounting for a growing share of holders. For the first time since late 2022, more than 50 per cent of the coins traded are doing so below their purchase price, according to Vetle Lunde at K33 Research. This figure stood at just 30 per cent a month ago.
Market Stress and ETF Outflows
This development is the latest sign of stress for a market that has been in a prolonged downturn for months. Bitcoin and numerous other tokens have been selling off since October, with few positive developments able to halt a decline that last week brought the largest token to its lowest since 2024, erasing all gains made during the crypto-friendly Trump presidency.
The selloff has been exacerbated by a roster of bitcoin exchange-traded funds trading in the United States, which have seen about US$5.5 billion in outflows over the past month, according to data. This further pressures the underlying price. The newest leg lower was triggered after bitcoin-treasury company Strategy Inc. announced a sale of a handful of tokens, causing anxiety among traders given the company's importance in the crypto ecosystem. Outflows from bitcoin-focused ETFs have accelerated, and volatility has spiked to a three-month high, K33 reported.
Impact on Holders
For bitcoin holders — both long-term and short-term — the situation has been painful. Ophelia Snyder, co-founder of asset-management firm 21Shares, noted: “Prices move because of structural positioning, leverage, emotional reactions and event-driven risk, but the bigger picture is a reflection of persistent market conditions. Until those underlying conditions change, I think we’re likely to continue seeing more of the same: range-bound markets, periodic volatility, leverage resets, and a lot of investors waiting for the next truly important catalyst.”
The significance extends beyond paper losses. Bitcoin’s most powerful rallies have historically depended on attracting new buyers willing to pay higher prices than the previous wave of investors. When more than half of the supply is underwater, the market begins to carry the weight of millions of disappointed holders who bought into last year’s enthusiasm.
Potential Headwinds and Reputation Damage
That can become a headwind of its own. Investors sitting on steep losses often use rallies as opportunities to exit positions rather than add to them, creating a source of latent selling pressure. At the same time, a prolonged drawdown risks damaging one of bitcoin’s most valuable assets: its reputation as a trade that reliably rewards patience. Every month spent far below its highs is another month in which a new generation of investors associates crypto less with extraordinary gains and more with missed opportunities, especially as capital chases faster-moving stories elsewhere in markets, such as artificial intelligence chipmakers.
Michael O'Rourke, chief market strategist at JonesTrading, commented: “After 17 years, bitcoin still has no use case beyond pure speculation.” This sentiment underscores the challenges facing the cryptocurrency as it struggles to regain its footing.
