The Massive Supply Overhang Weighing on Bitcoin: 6.6 Million BTC in Red

Bitcoin currently carries a significant supply overhang that could determine its next major price move. Chain analysis reveals that 6.6 million bitcoins—roughly one-third of all circulating supply—sit below their acquisition costs, creating a potential pressure point in any rallying attempt.

Understanding the On-Chain Pressure Signal

The metric tracking this phenomenon is known as “Supply In Loss,” which measures the total amount of Bitcoin experiencing unrealized losses at any given moment. It works by examining the complete transaction history of every BTC token and identifying the price point at which it last transferred hands. When that historical price exceeds today’s spot price, that coin enters loss territory. Aggregating all such coins reveals the network’s current stress level.

According to on-chain data, this supply in loss hit zero when Bitcoin peaked above $126,000 in October, signaling an extreme market euphoria where every holder was profitable. The subsequent pullback has reversed this dynamic entirely. With current BTC trading around $91,120, the loss indicator has surged dramatically to 6.6 million coins.

Why This Overhang Matters for Price Action

This supply overhang presents a classic market friction point. Investors holding positions underwater typically maintain a psychological target: breaking even. Once Bitcoin price approaches—or reaches—their cost basis, many activate their exit strategy. Instead of holding for further gains, the desire to escape losses triggers selling.

This behavior creates concentrated supply zones above current prices. When multiple holders share similar acquisition prices, they form natural resistance levels. A surge in buying pressure might push Bitcoin higher, but as prices approach these historical cost bases, selling accelerates. The result: increased volatility and potential reversals.

Visualizing the Loss Distribution Across Price Levels

The UTXO Realized Price Distribution (URPD) metric reveals where this underwater supply concentrates across various price points. Not all price levels hold equal amounts of loss-making coins. Some historical price ranges contain massive supply clusters, while others are relatively sparse.

This uneven distribution means Bitcoin won’t encounter uniform resistance climbing higher. Instead, it will face sudden, concentrated supply surges at specific price nodes. Investors sitting underwater at $85,000 might hold far more accumulated coins than those at $80,000, creating asymmetric selling pressure as price rebounds through each zone.

The 2023 Comparison: Recognizing Market Distress

Current Supply In Loss levels represent the most severe market distress witnessed since 2023, a period marked by significant Bitcoin volatility and capitulation events. The parallel suggests the market is grappling with comparable psychological and technical pressures—a reminder that recovery isn’t assured even after near all-time highs.

The persistence of 6.6 million underwater BTC means buyers attempting to push beyond previous peaks face continuous headwinds. Each gain triggers more stop-loss sales and breakeven exits, potentially capping rallies until the holding structure fundamentally shifts.

This supply overhang remains one of the most critical metrics for understanding Bitcoin’s next directional move.