Bitcoin is once again struggling to reclaim the $90,000 mark, caught in a tight trading band that reflects a market unsure of its next major move. After months of violent swings in both directions, volatility has compressed and price action has narrowed, exposing a rare standstill between buyers and sellers. This stalemate has deepened divisions among analysts: one camp sees the current phase as a healthy digestion of previous gains, while another warns that the underlying structure increasingly resembles the early phase of a new bear market that could stretch into 2026.
The core of the concern is not just the lack of sustained breakouts above key resistance zones, but a subtle shift in on-chain data. A recent analysis of network metrics points to a renewed rise in Bitcoin’s “Supply in Loss” — the share of circulating coins whose current market price is below the price at which they last moved on-chain. Historically, this metric has been a reliable early warning signal that the market may be transitioning from a corrective pullback into a more entrenched bearish regime.
Why “Supply in Loss” Matters
“Supply in Loss (%)” measures the proportion of coins currently sitting at an unrealized loss. When this share is low, most holders are in profit, which tends to support risk-taking behavior and dip-buying. When it starts to climb, more participants find themselves underwater, often leading to greater caution, tighter risk controls, and, in some cases, outright capitulation.
Crucially, the recent uptick in this metric is not occurring in isolation. It is emerging at a time when Bitcoin is failing to push convincingly above resistance, macroeconomic conditions remain fragile, and risk appetite across global markets is uneven. Together, these factors reinforce the idea that the market is slowly shifting from offense to defense, with investors more focused on capital preservation than aggressive accumulation.
Lessons From Previous Cycles: 2014, 2018, 2022
Looking back at earlier bear market phases—particularly in 2014, 2018, and 2022—a consistent pattern emerges. During those periods, Bitcoin’s Supply in Loss began trending higher well before prices reached their ultimate cycle lows. In other words, the initial rise in unrealized losses did not signal an immediate bottom, but rather the beginning of a protracted deterioration in sentiment and structure.
In each cycle, as the metric turned upward, price action typically remained under pressure. Bitcoin either continued to grind lower or became trapped in broad, choppy ranges with a downward bias. Importantly, the pain did not remain confined to short-term speculators. Over time, unrealized losses spread to longer-term holders as well, confirming a broader shift in psychology—from “temporary dip in a bull market” to “structural downtrend that may take time to resolve.”
True, durable bottoms in those cycles only formed after Supply in Loss had risen sharply and remained elevated, coinciding with periods of widespread capitulation, forced liquidations, and deep exhaustion among market participants. The first turn upward, therefore, has historically been more of an early alarm than a buying signal.
Where the Market Stands Now
At the moment, Bitcoin’s Supply in Loss remains well below the extreme levels seen at past major bottoms. From a strict quantitative standpoint, this suggests that the market is not yet in a state of broad distress or panic. Long-term holders, in aggregate, are still far from the kind of deep, systemwide losses that typically precede generational buying opportunities.
However, the significance lies less in the absolute reading and more in the direction of travel. After spending a period drifting lower, the metric has turned back up, implying that unrealized losses are once again spreading through the holder base. This change in trend has historically occurred at the onset of more defensive market phases, when optimism begins to fade and participants quietly adjust their behavior—reducing leverage, trimming risk, and adopting more conservative positioning.
This undermines the comforting narrative that the current softness in price is merely a shallow correction within a powerful and intact bull market. Instead, the data support the notion that Bitcoin may be entering a bear-market-like structure characterized by longer consolidation periods, repeated retests of support, and delayed, hesitant recoveries rather than explosive trend continuation.
The Role of Macro and “Shutdown Odds”
The broader macro backdrop adds another layer of complexity. Rising geopolitical tensions, uneven growth, shifting expectations about central bank policy, and the lingering risk of liquidity shocks all contribute to an environment where risk assets—Bitcoin included—struggle to maintain sustained uptrends. When market participants perceive a high probability of sudden liquidity withdrawal, regulatory clampdowns, or systemic “shutdowns” in credit or policy support, they naturally gravitate toward defense.
Those “80% shutdown odds” some strategists reference are not typically about Bitcoin itself turning off, but about the probability of sharp policy or market regime changes that could abruptly tighten financial conditions. In such an environment, large allocators and sophisticated traders often scale back exposure, preferring to protect capital rather than chase marginal upside. This shift in behavior aligns with what on-chain data is now hinting at: growing caution and creeping risk aversion.
Price Structure: From Breakdown to Stagnation
Technically, Bitcoin’s daily chart reflects a market still digesting a sharp structural breakdown. After being rejected near the $125,000 zone in October, BTC rolled over into a clear downtrend, printing a pattern of lower highs and lower lows. The sell-off intensified into late November, driving price decisively below the 50-day and 100-day moving averages and confirming that bulls had lost control of the short- and medium-term trend.
Since early December, however, the character of the move has changed. Rather than continuing straight down, Bitcoin has settled into a sideways range roughly between $85,000 and $92,000. This lateral consolidation suggests that the most aggressive phase of forced selling has passed, but it also reveals a lack of conviction from buyers. Every attempt to push higher has met with supply, while deeper dips have so far attracted only modest demand.
The 50-day moving average continues to slope downward above price, acting as dynamic resistance and capping rallies before they can build momentum. The 100-day moving average is also trending lower, reinforcing a heavy resistance zone in the $94,000–$96,000 area. Meanwhile, the 200-day moving average remains well below current prices, indicating that the long-term bull trend is not yet fully broken, but the intermediate structure is clearly under strain.
What an Early Bear Market Typically Looks Like
If the market is indeed in the early stages of a bear structure, investors should expect a specific pattern of behavior rather than a single dramatic collapse. Early bear phases often feature:
– Extended sideways ranges with a mild downward tilt.
– Repeated failures at key moving averages and resistance zones.
– Short, sharp rallies that are aggressively sold into.
– A gradual rise in unrealized losses as more coins slip underwater.
Importantly, volatility can remain relatively muted during these phases. Instead of one catastrophic breakdown, price often erodes slowly, wearing down confidence over time. This can be more psychologically taxing than a rapid crash, because it encourages false hope during each bounce while progressively weakening market participants’ resolve.
How Investors Can Move to Defense
In a regime where loss metrics are rising and the odds favor caution, the question becomes: how should investors respond?
Some key defensive steps often considered by market participants include:
– Reducing leverage: High leverage amplifies drawdowns. Dialing it back can dramatically lower the risk of forced liquidation during sudden spikes in volatility.
– Trimming speculative altcoin exposure: Historically, altcoins tend to underperform Bitcoin in sustained bearish phases. Concentrating on higher-quality assets can help stabilize portfolio performance.
– Rebalancing into stable assets: Gradually rotating a portion of holdings into cash or stable instruments can provide dry powder for future opportunities while limiting downside.
– Extending time horizons: Short-term trading becomes more challenging in choppy, grind-down markets. Investors who can afford to lengthen their time horizon may find it easier to withstand volatility.
None of these steps require capitulation or abandoning the asset class entirely; rather, they reflect a pivot from aggressive growth to risk management while on-chain and macro signals remain ambiguous.
What Would Invalidate the Bearish Signal?
While the current configuration leans cautious, it is not destiny. Several developments could counter or soften the emerging bearish signal:
– A decisive breakout and daily/weekly close above the $94,000–$96,000 resistance zone, ideally supported by rising volume.
– A renewed decline in Supply in Loss, indicating that more coins are moving back into profit and that buyers are successfully absorbing supply.
– Clear improvement in macro conditions, such as stabilizing rates, easing liquidity concerns, or reduced geopolitical risk, leading to a broader risk-on environment.
If these elements align, the current period might ultimately be remembered as a mid-cycle shakeout rather than the onset of a multi-year bear market. Until then, the burden of proof rests with the bulls.
Navigating the Coming Months
The interplay between on-chain data, macro conditions, and technical levels suggests that the coming months are likely to be defined by uncertainty rather than clarity. Bitcoin’s attempt to reclaim the $90,000 level is occurring against a backdrop of rising unrealized losses, softening momentum, and a cautious shift in market psychology. These ingredients do not guarantee a dramatic downturn, but they do demand respect.
For traders and long-term holders alike, the key is to recognize that the environment has changed. The phase of easy upside driven by relentless dip-buying may be over, at least for now. In its place is a more nuanced landscape in which risk management, patience, and flexibility are likely to matter more than raw conviction.
As long as Supply in Loss continues to creep higher and price remains capped beneath descending moving averages, the market is signaling that defensive postures are justified. A durable bottom historically has not formed until loss metrics move to extremes and capitulation flushes out excess risk. Until that kind of reset arrives—or until bulls decisively reclaim control—Bitcoin’s current trajectory looks less like a simple pause in a bull run and more like the early choreography of a bear market.