Definition ∞ Supply in Loss refers to the quantity of a cryptocurrency currently held by addresses where the asset’s acquisition price was higher than its current market value. This on-chain metric indicates the proportion of the circulating supply that, if sold, would result in a financial loss for the current holders. A high percentage of supply in loss suggests widespread unrealized losses among investors, often correlating with periods of market downturns and low investor sentiment. It serves as a significant indicator for market analysts to gauge potential selling pressure or the proximity to a market bottom.
Context ∞ On-chain analytics platforms frequently report on the supply in loss metric to provide insights into investor sentiment and market trends in cryptocurrency news. High levels of supply in loss often precede periods of holder capitulation, where despair leads to selling, potentially clearing the path for a recovery. Conversely, a declining supply in loss can signal increasing profitability and renewed investor confidence.
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