33% of BTC in Loss May Trigger Market Reset: Here’s Why

Main takeaways:

• About a third of the Bitcoin supply is now held at a loss, levels last seen in September 2024.

• Onchain metrics show an increase in short-term losses, but moderate selling pressure overall.

• Technical indicators suggest recovery potential after consolidation near $98,000-$103,000.

The ongoing Bitcoin (BTC) correction pushed about 33% of the total circulating supply in a loss, according CryptoQuant dataa level last seen in September 2024. While such figures may appear alarming, historical precedents suggest that similar phases often coincide with seller exhaustion rather than a full market crash.

Nearly a third of holders are now in losses, and this concentration of unrealized losses has historically marked pivot points in previous bullish cycles. These thresholds tend to form when liquidity stress peaks, a stage where most sellers have already acted, allowing the markets to reset structurally.

Losses among short-term holders (STH) also intensified. The short-term holder of seven days Spent Output Profit Ratio (SOPR), a metric that measurements if the coins moved onchain were sold at a profit or loss, it currently stands at 0.9904. Readings below 1.0 indicate that most coins are sold at a loss, suggesting increasing pressure from short-term traders.

To put it in perspective, SOPR’s Z-score, which measures how far current readings deviate from historical norms, is now at -1.29. This implies moderate sales pressure. In comparison, during the correction of August 2024, the same indicator fell to 0.9752 with a Z-score of -2.43, which marks a much deeper phase of capitulation.

Overall, the data suggests a market caught between patience and capitulation. If prices remain under pressure, long-term holders may start taking profits to safeguard their gains, while new investors may sell once they recoup their costs, potentially capping rebounds.

However, if the fear reaches the extreme and the selling pressure disappears, these same conditions could help to form a durable bottom and reset the sentiment for the next phase of accumulation.

Related: Three things that must happen for Bitcoin to avoid the bear market

Recovery momentum can take time to build

From a momentum perspective, the structure of the Bitcoin market appears oversold, but historical patterns indicate that recovery often follows a period of consolidation rather than an immediate reversal. A significant accumulation of short positions in the futures market could also serve as fuel for a rebound if prices stabilize in the short term.

Technically, Bitcoin continued to reflect Cointelegraph’s mid-October model forecast analysiswhere BTC is projected to retest the $103,500-$98,100 order block, a key demand region. A daily close below $98,100 will invalidate this setup and expose the yearly open near $93,500.

While recovery may take time, a steady consolidation between $98,000 and $103,000 could set the stage for a gradual rebound by the end of the year.

Related: Bitcoin price ‘normal’ 21% dip as accumulator wallets buy 50K BTC in day

This article does not contain investment advice or recommendations. Every investment and business move involves risk, and readers should do their own research when making a decision.