Bitcoin supply metric prints first 'buy' signal since late 2022 as bear market continues

Bitcoin (BTC) has added another bear-market bottom signal this month as analysis draws comparisons to November 2022.

Key points:

• Bitcoin adds to its list of bear-market bottom signals with a key supply ratio "buy" trigger.
• A bear-market floor could still be some time off, analysis says, with supply held at a loss still relatively low.
• Demand is the missing piece of the puzzle to shore up a bullish rebound.

Bitcoin profit metric echoes 2022 bear-market bottom zone

Crypto analyst Axel Adler Jr., a contributor to onchain analytics platform CryptoQuant, confirmed the return of a key Bitcoin buy signal.

Advanced Net UTXO Supply Ratio, which measures the proportion of the BTC supply which last moved in profit or loss, is back in negative territory for the first time in nearly four years.

“The ratio dropped into deeply negative territory and then crossed back above the signal threshold on the rebound, which caused the model to print BUY on several sessions in late June and early July,” Adler wrote. 

“This is the first buy trigger since November 2022, which was the bottom of the previous bear cycle.”

Bitcoin Advanced Net UTXO Supply Ratio. Source: CryptoQuant

UTXO Supply Ratio cues do not imply that a macro bottom has arrived, but occur “near cyclical lows.”

“Confirmation would be the ratio holding above zero together with rising price. The negative scenario is a move back into negative territory without price support,” Adler explained.

A missing piece of the puzzle involves supply being held at a loss, which has not yet reached the levels seen during previous bear markets.

Adler forecast that the 90-day simple moving average (SMA) of supply in loss should hit its bear-market reversal target within two months.

“Until then, it is more accurate to treat capitulation as a process rather than a completed fact,” he continued.

Bitcoin supply in loss. Source: CryptoQuant

Signals will not "stop BTC from going lower"

On the topic of UTXO Supply, fellow CryptoQuant contributor Darkfost also eyed a potential market inflection point this week.

Related: Bitcoin bear market ‘dead’ after first TD9 reversal signal since July 2022 fires

“Since it depends on the profit and loss of UTXOs, it can very well signal something during either a sharp drop or a sharp rise. That said, in terms of cyclicality, it wouldn’t be inconsistent to think that the end of this bear market could be approaching,” he wrote this week. 

“This won’t stop BTC from going lower, but we now have several signals pointing to seller exhaustion. The next step is a renewal of demand, and that could take some time.”

As BTC price expectations tend to favor a bear-market bottom coming in Q3 or later.