Current on-chain data presents concerns regarding the stability of the cryptocurrency market, as outlined by analyst Woo Minkyu from CryptoQuant. He highlights the significant rise in Bitcoin's supply that is currently at a loss, suggesting warning signs about market health.
The supply in loss metric currently stands at around 44% and is on the rise, even with Bitcoin's price above its realized value. Historically, scenarios like this have marked the beginning of bear markets rather than typical corrections in a bull market. This data indicates that a considerable portion of Bitcoin's circulating supply is operating below previous price levels, putting these assets in a position of unrealized losses.
Minkyu draws attention to the trend where heightened supply in loss precedes downward pressure in the market. Such heightened levels often occur at the bottom of bear markets and tend to follow periods of capitulation.
It appears we are not experiencing a temporary dip in the cycle. The available data suggests that Bitcoin is likely transitioning into a bear market phase with unresolved risks of further decline. Historical performance indicates that true market bottoms have usually been established after more significant supply loss expansions and more severe price compressions.
For retail investors, understanding these trends is crucial for making informed decisions in the cryptocurrency space. Staying alert to the implications of rising supply in loss may help gauge potential risks and opportunities ahead.