Bitcoin’s price has recently dipped below key supply thresholds, reflecting a worrying trend of unrealized losses and triggering concerns among investors. A significant portion of Bitcoin’s circulating supply is now underwater, mirroring a similar scenario seen in early 2022. This shift suggests increased risk for further sell-offs, potentially leading to a market downturn. Experts attribute this downward pressure to the lack of substantial ETF inflows and compressed volatility within the market. While some investors are cautiously eyeing potential reversals or a bottom formation, the current conditions demand attention and careful consideration. 25% of Bitcoin’s supply is currently underwater, according to on-chain analytics firm Glassnode, with the price hovering around $93,000. This precarious position echoes the fragility seen in early 2022, when similar underwater levels preceded a prolonged bear market. This raises questions about whether recent sell-offs will lead to a deeper correction or simply a pause before another upward push. The current market is caught between potential for further capitulation among top buyers and a possible exhaustion-driven reversal. Glassnode’s Supply Quantiles Cost Basis Model provides insights into this delicate balance, tracking the distribution of Bitcoin’s realized cost basis across different holders. This model divides supply into quantiles based on the average acquisition price, with 0.75 and 0.85 representing the cost basis for the top 25% and even steeper thresholds. When BTC falls below these lines, it signals widespread losses for recent buyers. Current market indicators suggest weakening demand – a lack of ETF inflows, subdued spot market volumes, and compressed volatility all point towards a cautious environment where traders are bracing for potential shocks rather than betting on upside. Macro economic factors like the US policy changes and global economic uncertainty also add to the sensitivity of the price. A breach below key support levels like $88,000–$90,000 could trigger a cascade toward $75,000–$80,000, reminiscent of 2022’s capitulation lows. However, history offers some hope. Past instances of high underwater supply have often marked local bottoms, where forced selling exhausts itself, paving the way for accumulation. Reclaiming the 0.75 quantile at $95,800 would alleviate immediate pressure and potentially signal a shift towards recovery, while surpassing the 0.85 quantile mark (around $106,200) could foster renewed bullish conviction. On-chain indicators like rising RSI divergences and stealthy OBV upticks suggest underlying strength in the market, but it is important for investors to see volume-backed breakouts. For long-term holders, this dip presents a crucial test of resolve. Bitcoin’s historical cycle dynamics highlight its resilience with institutional adoption and halving effects still in play. The path towards $110,000–$115,000 by year-end remains achievable if supports hold, potentially extending to $150,000 in the broader bull run. Investors should closely monitor quantile reclaims for a potential signal of recovery. Failure risks deeper pain, while success could ignite FOMO-fueled price growth. It is important to remember that this article is intended for informational purposes and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.