Bitcoin's underwater supply does not guarantee a bear market repeat

Bitcoin's recent price action has sparked concerns about a potential 2022-style bear market. The cryptocurrency's underwater supply has risen to 40%, but technical analysts argue that this figure is not necessarily a cause for alarm.

According to CoinMarketCap, long-term holders are continuing to accumulate Bitcoin, rather than sell into weakness. This behavior is in contrast to the 2022 bear market, where confidence across the crypto sector steadily eroded and triggered widespread selling from both short-term and long-term holders.

The current regulatory environment has been a key factor in Bitcoin's resilience, with expectations of a more crypto-friendly regulatory landscape contributing to its price stability. However, recent developments have cast doubt on this narrative. The SEC's withdrawal of the 'innovation exemption' for tokenized stocks has reduced the odds of the CLARITY Act becoming law, and Senator Cynthia Lummis has warned that if lawmakers miss this legislative window, the bill may not resurface until 2030.