45% of Bitcoin Supply Now Underwater — 2-Year High Raises Capitulation Risk
Around 8.94 million BTC — roughly 45% of circulating supply — is currently sitting at a loss, the highest share since January 2023, according to CryptoQuant analyst J.A. Maartun. He warned that a spike in supply in loss raises capitulation risk. Bitcoin fell about 10% in the past 24 hours, sliding below $65,500 after breaking under $67,000, per TradingView. US spot Bitcoin ETFs saw net outflows in late January 2026, recording the second- and third-worst weeks in ETF history; cumulative ETF inflows have declined about 12.4% from their October 2025 peak. Key implications for traders include elevated volatility risk, increased probability of forced selling by underwater holders, and sensitivity to ETF flows and macro events. Primary keywords: Bitcoin, BTC supply underwater, capitulation risk, ETF outflows. Secondary/semantic keywords: market volatility, spot Bitcoin ETFs, TradingView, CryptoQuant.
Bearish
The story is bearish because nearly half of circulating BTC is underwater — a concentration that historically precedes heightened selling pressure and volatility. A 45% share in loss increases the pool of holders who could capitulate if prices fall further or if macro/ETF-driven outflows accelerate. The recent ~10% intraday drop and documented net outflows from US spot Bitcoin ETFs (second- and third-worst weeks) amplify short-term downside risk. Past parallels: late-2022 and January-2023 sell-offs saw elevated supply-in-loss metrics followed by capitulation and short-term price bottoms; ETF outflows similarly intensified downward moves. For traders, expect: higher intraday volatility, greater likelihood of stop-loss cascades and liquidation events in leveraged positions, and increased sensitivity to fund flows and macro news. Over the longer term, fundamentals (adoption, ETF demand recovery, miner behavior) could restore balance, but near-term trade setups should prioritize risk management (reduced leverage, tighter position sizing, watch ETF flows and on-chain loss metrics).