Bitcoin’s Bear Market Bottom Signal Flashes Again: What It Means for Traders
A bitcoin bottom signal just fired again. Traders are watching because it has shown up near every major bear market low. I’ll be honest: I would not treat that as a green light by itself. For the first time in this cycle, more Bitcoin is sitting at an unrealized loss than in profit, which usually means the market has already taken real damage. The flip came as BTC fell to $61,300 on Thursday, with more than 10 million BTC underwater, or just over half the circulating supply.
Glassnode’s one-hour data showed BTC in loss peaking near 10.5 million coins. Supply in profit dropped to about 9.8 million BTC. Total circulating supply is roughly 20 million BTC. Put bluntly, more than half of all coins now sit below their holders’ cost basis. That is not a normal pullback. In past cycles, this crossover has tended to appear around capitulation, the ugly phase when forced sellers thin out and the market mood gets almost aggressively bleak.
Here is the catch. Timing. In 2015, supply in loss and supply in profit stayed close to even for almost a year before Bitcoin recovered. In 2019, it lasted about six months. The March 2020 Covid crash showed the same pattern, but only for around one month. In 2022, it hung around for about six months again. Most bottom-signal writeups imply the crossover is the event. That’s only half right. It has marked the zone before, not the exact day. Why does this matter? Because anyone trying to nail the precise low is still guessing, just with better evidence than usual.
Bitcoin also touched its 200-week moving average near $61,300 during the drop. That level reflects Bitcoin’s average price over the previous 200 weeks, and it has acted as support in past bear markets. My take: the 200-week average is useful, but people make it too sacred. When BTC bounces there, even briefly, it hints that larger buyers or long term holders still see that area as defensible. Barely holding it is not strength. Still, it beats slicing straight through it.
Macro pressure is not background noise here. Inflation worries and the Federal Reserve’s rate stance have made risk assets harder to own, Bitcoin included. When stocks wobble and investors cut risk, speculative assets usually get hit first. That can pull BTC lower even if long term holders still believe in the asset. Counter to the usual advice, a strong on-chain signal does not outrank macro stress. Sticky inflation plus a cautious Fed is not a friendly setup for a clean crypto rally. And yet, this is exactly when patient traders start watching harder. Bad-looking prices often create the better entries.
Regulation adds another layer of nerves. The SEC, CFTC, spot BTC ETFs, and staking rules are not directly tied to this supply metric, but they shape sentiment. We see this pattern constantly: markets sell first, then argue about the details later. Spot BTC ETFs were a major adoption event, but they also pulled Bitcoin closer to traditional finance. BTC now reacts more visibly to macro data and fund flows. Regulatory headlines move it too. A clean on-chain signal still matters. It just does not live by itself anymore.
What this means
The latest “supply in loss” reading is worth watching. It says Bitcoin has entered a painful capitulation phase, with most holders now underwater. In earlier cycles, that kind of damage often appeared near major lows. The 200-week moving average retest at $61,300 strengthens the case, since that level has held in prior bear markets. For long term Bitcoin buyers, this could be an accumulation zone. Not a pleasant one. Is this overkill for traders who only care about price? No, because cost-basis stress often explains why rallies fail or why sell pressure suddenly dries up. These setups require patience and, frankly, a strong stomach.
The next level is $60,000. If Bitcoin loses that area, traders will probably look toward $54,000, near realized price. Realized price is the average acquisition cost of all BTC in circulation, and Bitcoin has traded below it during major bear markets. Yes, this contradicts the comforting bottom-signal angle above; bear market signals can flash before the final washout. A clear break below $60,000 followed by a move toward $54,000 would point to deeper capitulation. Inflation data and Federal Reserve comments matter from here because they will keep steering risk appetite. I would watch duration as closely as price: past cycles lasted anywhere from one month to a year, so the clock matters almost as much as the chart.