Nearly half of the circulating bitcoin supply is now underwater, highlighting rising stress across the market as key indicators deteriorate.

Data from CEX.IO shows that around 50% of BTC is currently trading below its purchase price. The Bitcoin Impact Index — which measures financial strain across investor cohorts using on-chain metrics, ETF and derivatives activity, and liquidity flows — surged 13 points to 57.4 in the week ending March 28, marking its steepest weekly increase since January.

With a maximum reading of 100, the index has now entered the “high impact” zone, a level historically linked to broad market selloffs and double-digit price declines, including during downturns in 2018, 2022 and earlier this year.

Long-term holders, defined as wallets that have held bitcoin for more than six months, have seen a rapid reversal in fortunes. Just a week ago, when BTC traded above $70,000, this group was largely in profit. Now, more than 4.6 million BTC — roughly 30% of their holdings — are underwater, with realized losses last week reaching their highest level since 2023.

The report notes that this divergence between weakening prices and declining on-chain conviction has historically acted as a warning sign. Similar patterns in mid-2018 and mid-2022 were followed by price drops exceeding 25%.

Short-term holders are also facing mounting pressure, with approximately 47% of total bitcoin supply now held at a loss — levels last seen during February’s most stressed market conditions.

Meanwhile, capital flows that had supported the market earlier in the month have reversed. Stablecoin flows, which previously averaged daily inflows of $250 million, have flipped to outflows of about $292 million. ETFs and miners have also shifted from accumulation to net selling, adding further downside pressure.

Despite the growing stress, a key hallmark of full capitulation has yet to emerge. On-chain data shows no significant surge in BTC moving onto exchanges — behavior typically associated with panic selling — suggesting the market has not yet reached a full capitulation phase.