Bitcoin: 23% of BTC Supply at a Loss – Will It Drop Below $80,000 Again?

As previously emphasized by AMBCrypto, Bitcoin [BTC] faced strong resistance at $97,000, triggering a significant drop. As of the time of writing, it subsequently fell to $82,000, indicating a wave of profit-taking.

Despite some pullback, 76.08% of BTC supply is still in profit - the lowest level in six months - indicating that most HODLers are still in profit.

However, this has led to 23% of the circulating supply being in an unrealized loss state - about 4.56 million BTC. As more Bitcoin holders fall into unrealized losses, some holders may decide to sell to limit further losses.

To overcome this sell-side liquidity, the volume indicator is key.

Despite a surge in trading volume of 178.22% to $43.12 billion, net deposits on exchanges only increased by 3.96%, highlighting that the sell volume on major exchanges surpassed the buy volume.

In an uncertain economic environment, the buying pressure from U.S. investors remains low, indicating that retail buyers have not intensified their efforts to absorb the selling pressure.

This may indicate that the participation of third-party players (possibly institutions) is influencing the next market movement.

The high leverage risk of Bitcoin derivatives trading.

In the context of weak spot buying, Bitcoin's estimated leverage ratio (ELR) recently fell to a three-month low before surging significantly.

This suggests that derivatives traders are not deleveraging but are instead increasing leverage to take on higher-risk positions.

On March 9, Bitcoin fell by 6.41% to $80,000, leading to the liquidation of long positions totaling $195.86 million.

Institutional 'buying the dip' momentum is strong, potentially laying the groundwork for a short squeeze. This could drive Bitcoin to retest the resistance zone of $85,000 in the coming days.

However, breaking through this resistance level remains challenging. The ongoing escalation of selling could lead to further liquidations, causing Bitcoin to drop below $80,000 again.

In summary, after Bitcoin's weekly decline of 17%, institutional capital is absorbing the sell-side liquidity from traders. Nonetheless, the risks of 'buying the dip' remain high.