Bitcoin supply in profit and loss is approaching levels typically associated with bear markets, according to a new analysis from CryptoQuant. Analyst Darkfost reports that approximately 11.2 million BTC are currently in profit, while the previous bear market saw that figure fall to a low of around 9 million BTC. Meanwhile, roughly 8.2 million Bitcoin are currently at a loss, a level not recorded since late 2022. Data from Glassnode confirms this reading.
Darkfost noted that the figure for Bitcoin at a loss is particularly significant given that during the last bear market, it reached approximately 10.6 million BTC. The analyst argues this suggests the market is approaching a notable level of undervaluation comparable to conditions seen in the prior bear market cycle. These metrics have prompted broader debate among analysts about whether Bitcoin has further to fall and whether a market bottom may be drawing closer.
Not all analysts share the same interpretation of the data. Andri Fauzan Adziima, research lead at the Bitrue exchange, contends that the figures signal increasing market stress rather than immediate undervaluation. He points out that true capitulation bottoms have historically involved deeper pain, with supply in loss exceeding 50% and supply in profit falling to around 45% or lower during the 2022 downturn. He also notes that indicators such as net unrealized profit/loss and market value to realized value ratio were at more extreme levels during that period.
Additional data shows that Bitcoin has declined roughly 52% from its all-time high in the current cycle. This drawdown is considerably smaller than those seen in previous bear markets, which recorded declines of between 77% and 84% from their respective cycle highs. The comparatively moderate decline has contributed to the ongoing debate about whether current conditions truly reflect a bear market or represent a less severe correction.
Bitcoin author Timothy Peterson offered a macroeconomic perspective, writing on X that Bitcoin tends to face headwinds when the US dollar is strong and the Chinese yuan is weak. He attributed this dynamic to tighter global liquidity, explaining that higher dollar yields draw capital toward cash and bonds while investor sentiment turns cautious as China eases its own monetary policy. Peterson suggested these conditions are unlikely to reverse until US interest rates decline and dollar yields lose their appeal to investors.
Peterson indicated that a meaningful shift in this environment is not likely until the second half of 2026, and possibly not until 2027. Supporting his view on dollar strength, data from TradingView shows the US Dollar Index has risen approximately 5% over the past two months. The combination of macroeconomic pressures and on-chain supply metrics continues to shape analyst outlooks on Bitcoin’s near-term trajectory.
Originally reported by CoinTelegraph.
