Bitcoin’s growing share of supply has been reduced underwater, and CryptoQuant contributor Darkfost has argued that the market is now closer to historical bear phase conditions than a confirmed bull trend. His latest charts show that 43% of the Bitcoin supply in UTXOs is currently in losses, leaving only 57% in gains.
Darkfost focuses on distributing the supply among the results of unspent Bitcoin transactions, a way to track how many coins are sitting above or below value based on value. In his reading, the metric has reached an area that has historically marked the border between advanced bull markets and extended corrections.
“About two investors are currently at a loss. More specifically, this refers to the supply inside each UTXO in Bitcoin. Currently, 43% of this supply is at a loss,” he wrote on X. He added that “historically, as the histogram shows, we usually see about 75% of the supply in profit.”
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This framework is central to the thesis. When the supply-to-profit ratio rises above about 75%, Darkfost said, bullish trends are usually “confirmed and accelerated.” As more supply begins to disappear, the opposite occurs: the correction deepens, confidence weakens, and the market begins to resemble previous market structures. With Bitcoin now up 57%, he said conditions are “closer to those seen during the deepest stages of a bear market”.
However, he did not present the current setup as a one-way crash. Darkfost said that the market is showing signs of stabilization, which he associated with the current phase of consolidation. But he also warned that the process may not be complete. “It is still possible for the market to go lower to shake up LTH further and push the supply share in losses to around 45%, the level reached in previous bear markets,” he said.
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The macro fund is weighted in Bitcoin
His second chart relates the chain’s deterioration to a less supportive macro context for risk assets. Darkfast claimed that as tensions escalated around the Strait of Hormuz, the oil rally added another layer of pressure to Bitcoin. “Oil has risen more than 60% since the start of the year, a significant increase in market concerns about the geopolitical situation,” he wrote. “This is not surprising, given that the Strait of Hormuz accounts for about 20 percent of the world’s daily oil exports and about 35 percent of oil transported by sea. Therefore, any event that closes the strait or disrupts transit has an immediate impact on oil prices.”
He extended this argument beyond energy markets. According to him, the rise in oil prices directly affects inflation expectations and widespread financial market stress, a combination that historically does not favor speculative assets. “For an asset as volatile and risky as Bitcoin, this type of environment is unfavorable,” wrote Darkfost. “Historically, periods when oil prices recover have often coincided with the end stages of BTC cycles. These moments also indicate geopolitical tensions that are not conducive to risk-taking or exposure to speculative assets.”
Taken together, these two charts depict a market that is not yet in a bearish trend, but is heading towards an area where it will be harder to reject the sign. The immediate question is whether Bitcoin will be able to regain its supply share in profits and regain its historical high of 75%, or whether the macro bullish pressure and further selling by long-term holders will push the market into loss territory first.
At press time, BTC was trading at $67,730.
Featured image created with DALL.E, chart from TradingView.com
