Almost 50% of all active bitcoin is currently at a loss as long-term investors liquidate their holdings.

Almost 50% of all bitcoin is presently trading at a loss, with the Bitcoin Impact Index rising to 57.4, signaling elevated stress levels.

(Behnam Norouzi/Unsplash)

Key points:

• Almost half of all circulating bitcoin is currently trading at a loss, with the Bitcoin Impact Index rising to 57.4, reflecting “high impact” stress levels not observed since January.
• Long-term bitcoin holders who were realizing profits a week ago are now facing losses, with over 4.6 million BTC from these wallets now in deficit and realized losses at their peak since 2023.
• Capital flows that had been sustaining the market have shifted, with stablecoin inflows changing to outflows and ETFs and miners transitioning from accumulation to selling, although holders have yet to significantly deposit BTC on exchanges.

Almost half of all bitcoin BTC$67,526.65 in circulation is now valued lower than its purchase price, as indicated by data from the Bitcoin Impact Index, which saw a significant rise last week as stress levels returned across various market segments.

The index, which assesses financial stress for bitcoin user groups based on on-chain activity, ETF and derivatives engagement, and liquidity dynamics, soared 13 points to 57.4 during the week concluding March 28, marking its largest increase since January, CEX.IO highlighted in a recent report.

This level, within a scale of up to 100, places it firmly in the “high impact” category that has historically indicated broad sell-offs leading to double-digit price declines in 2018, 2022, and earlier this year.

Long-term holders, defined as wallets that have maintained BTC for over six months, were selling for profit just a week ago when the cryptocurrency was trading above $70,000. Currently, over 4.6 million BTC from these wallets, approximately 30% of their overall holdings, are in the negative, as noted in the report. Their realized losses last week were the highest since 2023.

“This type of divergence between price movements and on-chain conviction has historically served as a warning signal,” the firm stated. “For example, similar patterns were observed in mid-2018 and mid-2022 before price declines exceeding 25%.”

Short-term holders are experiencing comparable challenges. The report indicated that 47% of the total bitcoin supply is presently held at a loss, a condition not seen since the market’s most distressed period in February.

Concurrently, capital flows that had previously bolstered the market earlier this month have receded. Daily net flows for stablecoins, which had averaged inflows of $250 million, have turned into outflows of $292 million. ETFs and miners have also shifted from accumulation to selling, according to the firm.

Up to this point, one crucial support remains stable: On-chain data indicates that holders are not rushing to deposit BTC on exchanges en masse, a behavior typically associated with complete capitulations.