After several days of sharp decline, Bitcoin price appears to have found a somewhat reliable anchor around $60,000. However, recent on-chain data suggests that the premium cryptocurrency may not fall for long, and a bullish reversal appears to be on the horizon.
Has the bottom of BTC price already been formed?
In a June 7 post on the X Platform, cryptocurrency analyst Ali Martinez revealed that Bitcoin price may have just reached a major bottom in this cycle. This valuation is based on changes in the Bitcoin Supply Loss Index, which measures the amount of BTC in circulation that was last moved at a price above its current market value.
This on-chain metric provides insight into how much pressure investors are under (or how far below the surface) they are when they are losing money on Bitcoin. Therefore, supply loss indicators near unprecedented levels are a sign of general fear and impending changes in Bitcoin market dynamics.
Martinez pointed out that the main cryptocurrency formed the bottom of major cycles in the past when it suffered losses of more than 10 million BTC. According to data from Glassnode highlighted by analysts, Bitcoin has breached this threshold, with 10.46 million coins (more than half of the circulating supply) underwater.
As observed in the chart above, Bitcoin price underwent a bullish reversal in late 2018 as the loss supply crossed this 10 million threshold. A similar pattern could be seen in the price of BTC when BTC supply loss rises to this level around 2022.
Martinez explained:
I believe this is an important signal because selling pressure often begins to subside as fewer investors are willing to realize losses and the likelihood of a market bottom forming increases.
Based strictly on historical context and patterns, it is likely that a bottom in BTC price is forming at the current level. However, the key factor to discount is that Bitcoin's circulating supply decreased significantly in both periods (approximately 17.4 million and 19.2 million toward the end of 2018 and 2022, respectively).
Due to the decrease in circulating supply, the supply loss may rise slightly this time, suggesting that BTC price may fall further. This was evident in 2015 (when circulating supply was much lower) and a bullish reversal occurred when supply losses did not reach the 10 million threshold.
Bitcoin price overview
As of this writing, BTC price is around $62,746, reflecting a 2.5% increase over the past 24 hours.
