On-chain data shows that Bitcoin’s supply rate in losses has witnessed a change in direction that has often led to bearish phases in previous cycles.

The 365-day SMA of Bitcoin supply loss has been rising recently

As noted by an analyst at CryptoQuant Quicktake postBitcoin supply loss has started to trend upward again. This metric measures, as the name suggests, the percentage of the total circulating supply of BTC that is currently held at a net unrealized loss.

The indicator works by scanning the transaction history of each token in circulation to determine the price at which it was last traded on the network. If the value of the previous transaction for any coin was greater than the last spot price, then the metric assumes that the token is underwater.

The supply in loss adds up all the coins that fall into this category and determines how much of the supply they constitute. The counterpart metric, known as profit supply, tracks the opposite type of supply. However, since the total supply must add up to 100%, the supply in gain is simply equal to the supply in loss subtracted from 100.

Here is a chart showing the 365-day straightforward moving average (SMA) trend of Bitcoin supply loss over the cryptocurrency’s history:

As shown in the chart above, the 365-day SMA bitcoin supply loss dropped to its lowest point in the cycle in October. This decline came as the asset reached a modern all-time high (ATH) of more than $126,000.

However, since the low, the indicator has witnessed a rapid rally as a consequence of the bearish momentum that BTC has experienced post-ATH. For now, the rate has not risen to a significant level compared to previous capitulation levels, but the change in direction is taking hold.

“Historically, this shift marked the early phase of a bear market, when losses began to spread beyond short-term holders and gradually trickled down to long-term participants,” the quant explained. From the chart we can see that bearish transitions in previous cycles occurred when the indicator shot up and its high value coincided with the bottom of the cycle.

Time will tell whether the recent supply reversal at a loss will be the start of something similar. At the beginning of this cycle, the boost in the indicator turned out to be only ephemeral, as the decline in the first half of 2025 gave way to a renewed boost in dynamics, rather than a prolonged bear phase.

BTC price

At the time of writing, Bitcoin is trading at around $89,000, up over 1% in the last 24 hours.