Bitcoin Faces Supply Overhang: 6.6 Million BTC Bought Above Current Price

A significant supply overhang is currently weighing on the Bitcoin market, with approximately 6.6 million BTC—about 31% of Bitcoin's circulating supply—purchased at prices higher than current levels, according to on-chain data analysis. This substantial volume of Bitcoin held at unrealized losses could play a critical role in shaping market dynamics, particularly if prices attempt to recover. The overhang may trigger waves of selling pressure as holders look to exit at break-even positions.

What We Know

Multiple sources, including on-chain analysis from CryptoQuant community analyst Maartunn, confirm that approximately 6.6 million Bitcoin were acquired at prices above the current spot price. This phenomenon, termed the "Bitcoin Supply Overhang," highlights the potential for significant market resistance during any upward price movement.

The analysis relies on the "Supply In Loss" indicator, a metric that calculates the total volume of Bitcoin currently held at unrealized losses. This is determined by identifying Bitcoin transactions where the last recorded transaction price exceeds the current spot price.

According to reporting from NewsBTC, the "Supply In Loss" metric has shown notable fluctuations in recent months. However, the source also references Bitcoin reaching an all-time high above $126,000 in October—a figure that appears to be an error, as Bitcoin has not historically traded at such levels. Despite this discrepancy, the 6.6 million BTC figure remains consistent across sources.

The "Supply In Loss" indicator works in tandem with a counterpart metric called "Supply In Profit," which tracks Bitcoin held at gains relative to purchase price. Together, these metrics provide a clearer picture of the market's profit and loss distribution, offering valuable insights into potential resistance levels.

What's Still Uncertain

While the data provides a compelling narrative, some technical details remain unclear. For example, the precise methodology behind the "Supply In Loss" indicator—specifically how it determines the "last transaction price" for each Bitcoin—has not been fully explained in available reporting. Additionally, the exact price levels at which these 6.6 million BTC were purchased remain unspecified, leaving gaps in understanding where key resistance zones might emerge during a recovery.

The anomalous reference to Bitcoin reaching $126,000 in October also raises questions about the accuracy of the historical context provided by NewsBTC. Clarifying these details would enhance the reliability of the analysis.

Why This Matters

This supply overhang represents a significant psychological and technical barrier for Bitcoin's price recovery. With 6.6 million BTC purchased at higher prices, any rally could face substantial selling pressure as holders attempt to minimize losses or exit positions near their break-even points. For traders and investors, this data offers critical insights into potential resistance levels and market dynamics.

The magnitude of this overhang suggests that sustained upward price movement may require considerable buying pressure to absorb potential selling from underwater holders. This dynamic could contribute to increased volatility and choppy price action during recovery attempts, presenting challenges for bullish market participants.

Key entities: Bitcoin (BTC), Maartunn, CryptoQuant, NewsBTC
Sentiment: Bearish