Nearly half of all bitcoin currently in circulation is trading at a loss, according to recent market data. The Bitcoin Impact Index has climbed to 57.4, a level categorized as indicating high-impact stress. This marks the most severe stress reading recorded since January, raising concerns among market observers about the broader health of the crypto market.
Long-term bitcoin holders, who were still realizing profits as recently as one week ago, have now seen their positions move into negative territory. More than 4.6 million BTC held in long-term wallets are currently underwater. Realized losses among this group have reached their worst point since 2023, underscoring a notable shift in market conditions for investors who had previously weathered earlier downturns.
Capital flows that had been supporting the market have also reversed direction. Stablecoin inflows, which previously provided liquidity and buying pressure, have turned into outflows. This withdrawal of stablecoin capital removes a key source of demand that markets had been relying on during prior periods of consolidation.
Exchange-traded funds and miners, both of which had previously been in an accumulation phase, have shifted toward selling. This change in behavior from two significant market participants adds further downward pressure on prices. The combined effect of these reversals suggests that multiple pillars of market support are weakening simultaneously.
Despite these developments, holders have not yet moved to deposit bitcoin onto exchanges in large numbers. A mass transfer of BTC to exchanges is often interpreted as a precursor to widespread selling, so the absence of this behavior may indicate that capitulation has not fully taken hold. Whether this restraint continues as losses deepen remains a key factor to watch in the near term.
Originally reported by CoinDesk.
