While the opinion on whether Bitcoin (BTC) has already hit the current market cycle’s bottom remains split, some metrics indicate that the top cryptocurrency may be very close to one. The Bitcoin Supply In Loss (SIL) metric has historically functioned as a reliable bottom indicator, and is currently sitting at slightly above 40.6 percent.
Bitcoin SIL gives hint about market bottom
To explain, Bitcoin SIL is a metric that measures what share of the current circulating BTC supply is held below its cost basis. Currently, this metric is experiencing a strong rebound, which signals that the $70,000 could be close to BTC’s macro-bottom.
There’s also the long-term pattern behind Bitcoin SIL that gives it more credibility. For instance, since 2015, every major cycle low has occurred when this metric pushed into the upper band of its descending trendline.
However, each new cycle bottom has required a lower percentage of supply in loss than the previous one. In simple words, each Bitcoin market bottom has formed with fewer investors holding coins at a loss than the previous cycle, suggesting the market is becoming stronger and more resilient over time.
In BTC’s earlier cycles – pretty much all market cycles up until 2017 – deep bear-market bottoms required extreme pain, usually having more than 60 percent of BTC supply underwater.
However, as BTC matured, the monetary hardship felt by investors got progressively better. For example, both the 2018-2019 and 2020-2022 market bottoms formed with much lower loss thresholds. As of Monday, the same structural line sits closer to the high 40 percent area.
BTC market showing clear signs of maturity
Current Bitcoin SIL reading shows that the Bitcoin market has clearly matured. With the entry of institutional investors, BTC supply is now being increasingly held by stronger hands, long-term holders, exchange-traded funds (ETFs), and investors with higher conviction.
As a result, the BTC market may no longer necessarily require a 60 percent plus supply to be in loss to create a capitulation-style opportunity.
If BTC continues to weaken or consolidate, a retest of the descending loss-threshold line would place the market in a region that has repeatedly marked attractive accumulation windows. From a risk/reward perspective, a retest of this decade-long structure would be one of the most important signals to watch.
This thesis aligns with recent analysis which hinted that BTC is flashing a bottom signal, with the BTC risk index hitting the 2023 floor zone.
Lower price volatility further indicates that the premier cryptocurrency is likely preparing for a volatile move, with experts predicting the direction to be upwards.