Bitcoin Plunges Below $60,000, Triggering Historic Loss-Making Supply
Bitcoin suffered its worst weekly performance since the collapse of Sam Bankman-Fried’s FTX exchange in 2022, with the price falling below $60,000 last Friday. The selloff was so severe that more than half of Bitcoin’s circulating supply is now trading at a loss, according to data highlighted by Bloomberg’s Markets page. This marks a dramatic reversal from the optimism that had buoyed the market earlier in the year.
The decline below $60,000 represents a critical psychological threshold for traders. Bitcoin had previously held above that level for several weeks, and its breach has reignited fears of a deeper correction. The fact that over 50% of the circulating supply is now underwater underscores the breadth of the downturn. It is not merely a price event but a reflection of widespread distress among holders.
Bloomberg’s analysis notes that the rebound earlier in the week from “the depths of despair” under $60,000 had already prompted Wall Street’s familiar effort to “call the bottom.” This suggests that traders remain deeply uncertain about whether the selloff has run its course. The market is caught between hopes of a recovery and the reality of mounting losses.
Context: From Rebound to Rout
Bitcoin’s latest selloff comes after a period of relative stability and even optimism. The cryptocurrency had rallied sharply from its lows in late 2022, driven by institutional adoption and the approval of spot Bitcoin exchange-traded funds in the United States. However, the recent downturn has erased many of those gains.
The worst week since FTX’s collapse is a stark reminder of Bitcoin’s volatility. The FTX debacle in November 2022 sent Bitcoin to a two-year low of around $16,000. The current selloff, while less severe in absolute terms, has been equally jarring for investors who had grown accustomed to the upward trajectory.
Bloomberg’s framing emphasises that the weakness is not just a price story but a sentiment and positioning story. When a majority of supply is underwater, it often signals broader pressure on holders. This increases the risk of more selling if confidence does not recover. The market is still trying to determine whether this is a temporary shakeout or the start of a deeper reset.
Market Implications: What the Loss-Making Supply Means
The fact that more than half of Bitcoin’s circulating supply is now in loss-making territory has significant implications for market dynamics. Historically, such levels have been associated with capitulation events, where weak hands sell at a loss, often marking a bottom. However, they can also precede further declines if selling pressure intensifies.
For long-term holders, the current situation presents a dilemma. Those who bought at higher prices may be reluctant to sell at a loss, but the fear of further downside could force some to exit. This creates a delicate balance between holding and selling. The market’s ability to absorb this supply will depend on whether new buyers step in at these levels.
Bloomberg notes that the earlier rebound from below $60,000 had already triggered Wall Street’s effort to call the bottom. This is a common pattern in volatile markets, where traders try to anticipate turning points. However, the fact that the rebound was short-lived suggests that the selling pressure remains strong. The market is still searching for a floor.
Regulatory and Broader Context
The selloff also comes amid a backdrop of regulatory uncertainty. While the approval of spot Bitcoin ETFs was a milestone, it has not insulated the market from broader macroeconomic pressures. Rising interest rates and geopolitical tensions have weighed on risk assets globally, and Bitcoin has not been immune.
Bloomberg’s coverage does not delve into specific regulatory developments, but the broader context is important. The cryptocurrency market remains highly sensitive to news from regulators, particularly in the United States. Any hint of tighter oversight could exacerbate the current downturn.
For now, the focus is on whether Bitcoin can stabilise above $60,000. A sustained recovery would require a shift in sentiment, which may depend on external factors such as macroeconomic data or institutional buying. The loss-making supply metric will be closely watched as an indicator of market health.
Analytical Closing: A Market in Limbo
Bitcoin’s worst week since FTX and the fact that over half of its supply is now at a loss paints a picture of a market in limbo. The selloff has been sharp, but the uncertainty about whether it is a temporary shakeout or the start of a deeper reset remains unresolved. The market is caught between the hope of a rebound and the reality of mounting losses.
The key takeaway from Bloomberg’s analysis is that this is not just a price story. It is a sentiment and positioning story. When a majority of supply is underwater, it signals broader pressure on holders and increases the risk of more selling if confidence does not recover. The market is still trying to determine the next direction.
For investors, the focus should be on the fundamentals. Bitcoin’s long-term value proposition remains intact, but short-term volatility is likely to persist. The current selloff may present opportunities for those with a long-term horizon, but it also carries significant risks. As always, caution is warranted.
For more on Bitcoin’s price action and market trends, see our Bitcoin coverage.
