‘40% of long-term supply under loss’ – Why Fidelity foresees Bitcoin cycle bottom

After a persistent downturn since last October, Bitcoin is showing signs of forming a market cycle bottom.

According to Fidelity Research Analyst Zack Wainwright, long-term holders (those who’ve held for over six months) are nearing a record 15 million BTC. 

At the same time, over 40% of this supply is underwater, mirroring past historical patterns. 

Nearly 40% of that supply is now at a loss—a level that has previously aligned with bitcoin’s bottoming process. The key question: Is history starting to rhyme?

On a 30-day average, the BTC supply in loss had climbed to 50% as the asset slipped below $63K on Friday, 17th of July. 

In the past, BTC bottomed out when supply in loss hit around 46%-56%. In 2022, BTC marked a bottom near $16K, and the supply in loss peaked at 50%. 

Although history rhymes, past patterns don’t always predict future outcomes. In fact, ongoing macro and geopolitical pressures could limit risk appetite for crypto and the U.S equity market in Q3, according to other analysts. And institutional demand is already reinforcing this. 

U.S. Spot Bitcoin ETF demand remains muted

Despite recording three consecutive days of inflows since Tuesday, U.S. Spot BTC ETFs have been muted on a month-over-month average.

According to Glassnode, the two largest entities, BlackRock and Fidelity, have seen a sustained institutional sell-off that rivals 2025. 

The 30-day average ETF outflows hit over 2K BTC per day in June and early July. This has eased slightly to about 1,250 BTC per day this week, but the speculative interest has also dropped, as indicated by ETF trade volumes.

For Glassnode, this meant any potential BTC price recovery could be delayed unless institutional demand improves. 

Both directional conviction and activity levels among the top two ETF vehicles remain deeply muted. Any durable recovery will need this dynamic to reverse meaningfully.

As of writing, Bitcoin [BTC] traded at $62.8K, down 4% and close to erasing all the gains made after the relief rally triggered by a softer CPI print.

And institutions and professional traders were not ruling out further pullback, as shown by Options positioning.

In the past 24 hours, the top Options volumes were concentrated at $62.5K and $56K price targets for puts (bearish bets), underscoring massive hedging for further downside protection. 

Still, there was significant volume for calls (bullish bets, green bars) eyeing $68K and $79K. This underscored a potential sideways structure expectation in July between $55K-$70K.

Overall, $60K has been a key support, and metrics signal that it could become a potential market cycle bottom. However, sharp moves below $60K can’t be overruled in the short term amid macro headwinds. 

Final Summary

• Fidelity projected that Bitcoin was likely in the cycle bottoming phase as supply in loss hit +40%
• In the meantime, traders were betting BTC price could slide to $62.5K or $56K this month