Bitcoin selloff leaves half of all supply trading at a loss

A roster of bitcoin exchange-traded funds trading in the United States has seen about US$5.5 billion in outflows over the past month, according to data, further pressuring the underlying price. Photo by SEBASTIEN BOZON/AFP via Getty Image

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Bitcoin’s latest retreat has been so severe, it has pushed more than half its circulating supply into loss-making territory.

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With the coin trading around US$61,000 — down about 50 per cent from its record highs — and a fresh break below its 200-week moving average, it is quickly racking up losses for a growing share of its holders. For the first time since late 2022, more than 50 per cent of the coins trading are doing so below their purchase price, according to Vetle Lunde at K33 Research. The figure stood at just 30 per cent a month ago.

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It’s the latest sign of stress for a market that has been mired in a downdraft for months. Bitcoin and numerous other tokens have been selling off since October, with few positive developments able to arrest a decline that last week brought the largest token to its lowest since 2024 and wiped out all gains notched during the crypto-friendly Trump presidency.

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Its newest leg lower set off after bitcoin-treasury company Strategy Inc. announced a sale of a handful of tokens that sent anxiety swirling among traders, given the importance the company has held within the crypto ecosystem. Outflows from bitcoin-focused exchange-traded funds have accelerated, too, and volatility has spiked to a three-month high, K33 said.

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For bitcoin holders — long- and short-term ones — it has been painful.

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“Prices move because of structural positioning, leverage, emotional reactions and event-driven risk, but the bigger picture is a reflection of persistent market conditions,” said Ophelia Snyder, who was a co-founder of the asset-management firm 21Shares. “And 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.”

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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.

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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.

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“After 17 years, bitcoin still has no use case beyond pure speculation,” said JonesTrading chief market strategist Michael O’Rourke.