How Severe Is Bitcoin’s Current Drawdown?
Bitcoin traded at $66,450 on Thursday, marking a 47% decline from its $126,000 all-time high reached in October 2025. The drop has pushed a large share of holders into unrealized losses, highlighting the pressure still present across the market.
Roughly 8.8 million BTC are now held below cost basis, representing about 44% of circulating supply. In dollar terms, this equates to nearly $600 billion in unrealized losses, according to Glassnode data.
The scale of losses places current market conditions close to prior bear market phases. Bitcoin is also trading 24% below its yearly open of $87,500, reinforcing the extended nature of the downturn.
Glassnode noted that the current setup shows a “structural resemblance to conditions observed in Q2 2022.”
What Does Supply in Loss Mean for Market Structure?
The increase in supply held at a loss has historically led to redistribution phases, where weaker holders exit positions and new buyers accumulate at lower levels. This process can take time and often precedes recovery cycles.
Glassnode pointed to the 2022 bear market as a reference point, when roughly 3 million BTC were redistributed before a recovery could take hold. The current overhang is materially larger, suggesting a longer adjustment period.
“Historically, resolving a supply overhang of this scale has required a meaningful redistribution of coins from loss-realizing holders to new buyers at lower prices.”
Long-term holders are already contributing to this process. Realized losses among investors holding BTC for more than 155 days have risen to $200 million, indicating active selling below cost basis.
“A meaningful cooldown toward levels below $25M per day would represent a more compelling signal of exhaustion in selling pressure, and a prerequisite for the base formation that historically precedes a sustainable bull market transition.”
Investor Takeaway
Why Are US Investors Still on the Sidelines?
Market data suggests that US-based investors have not returned at scale. Bitcoin’s spot price is currently below the average cost basis of US spot Bitcoin ETF holders, estimated at $83,408, placing many investors under pressure.
The Coinbase Premium Index, which tracks price differences between US and offshore exchanges, remains negative. This indicates weaker demand from US participants relative to global markets.
CryptoQuant stated, “The persistent negative premium indicates that US investors have not yet re-entered the market at scale.”
Fund flow data supports this trend. Global Bitcoin investment products recorded more than $194 million in net outflows during the week ending March 27, reflecting continued risk-off positioning.
Investor Takeaway
What Do Demand Metrics Reveal About Market Direction?
Bitcoin’s apparent demand has remained negative since mid-December 2025, indicating ongoing selling pressure. Capriole Investments data shows demand at -1,623 BTC, with sellers continuing to dominate market activity.
CryptoQuant linked this trend to broader distribution across the market, noting, “The sustained demand contraction, now persisting since late November 2025, confirms that the broader market remains in distribution.”
Persistent negative demand signals that accumulation has not yet resumed at scale. Until demand stabilizes and begins to absorb supply, price recovery is likely to remain constrained.
