On‑chain shows 25%+ of Bitcoin supply underwater; $94K rejection underscores risk
On‑chain data from Glassnode shows more than 25% of Bitcoin supply is now in unrealized loss after BTC fell below the 0.75 cost‑basis quantile in mid‑November. The drop indicates recent large buyers are underwater, increasing structural risk and market sensitivity to macro shocks. Bitcoin failed to reclaim the key $94,000 region on Dec 3 and currently trades around $92,500; the 0.75 quantile sits near $95,800 while a break above the 0.85 quantile (~$106,200) would be needed for a more decisive bullish shift. Technicals (DMI, ADX) show weakening bullish momentum and a failed higher‑low, suggesting buyers lack conviction. With over a quarter of supply underwater, the market faces two paths: top‑buyer capitulation causing a deeper reset, or seller exhaustion leading to stabilization if the underwater supply is absorbed. Traders should watch cost‑basis quantiles (0.75 and 0.85), $94K resistance, macro drivers (yield and liquidity), and on‑chain flow for signs of capitulation or recovery.
Bearish
More than 25% of circulating BTC being underwater (below the 0.75 cost‑basis quantile) raises immediate downside risk because a concentrated cohort of recent large buyers faces unrealized losses. Historically, breaching such quantiles increases sensitivity to macro events and elevates capitulation risk among late entrants. The rejection at $94K — a level aligned with the 0.75 quantile — and weakening technicals (DMI losing bullish strength, flattening ADX, failed higher‑low) suggest buyers currently lack conviction. Short‑term implication: higher probability of volatile downside or a deeper reset if macro conditions turn adverse and underwater holders sell. Traders should manage risk, tighten stops, and watch on‑chain flows and cost‑basis quantiles for capitulation signs. Long‑term implication: structural recovery requires absorption of underwater supply and a sustained break above the 0.85 quantile (~$106K); until then, market direction remains vulnerable to external liquidity and yield shifts. Similar past episodes (quantile breaches followed by heightened volatility) show that markets can either capitulate quickly or consolidate for extended periods depending on liquidity and macro backdrop.