Bitcoin Cycle Bottom Forms as Supply in Loss Hits 40%

Fidelity's Research Analyst Zack Wainwright believes that Bitcoin is forming a market cycle bottom after a prolonged downturn since October. Long-term holders, who have held onto their coins for over six months, are nearing a record 15 million BTC.

Currently, around 40% of this supply is underwater, mirroring past historical patterns. In the past, when this percentage approached 46-56%, it aligned with Bitcoin's bottoming process.

The current supply in loss has climbed to 50% on a 30-day average, as BTC slipped below $63K on July 17th. This is similar to what happened in 2022, when the supply in loss peaked at 50% near the $16K bottom.

However, some analysts warn that ongoing macro and geopolitical pressures could limit risk appetite for crypto and the US equity market in Q3. Institutional demand is already reinforcing this, with muted U.S. Spot Bitcoin ETF demand despite recording three consecutive days of inflows since Tuesday.