It’s been a bumpy ride for Bitcoin lately, with prices dropping and markets feeling shaky. And as a result of this recent turbulence, a significant portion of the Bitcoin in circulation – over a quarter, actually, hitting 26% – is now what’s called “underwater.” Essentially, this means that for a good chunk of Bitcoin holders, their investment is currently worth less than what they originally paid for it.

This is quite a turnaround from just a short time ago, according to data from the market analysis gurus at CryptoQuant. If you rewind to December 15th, you’d see a completely different picture: a mere 0.015% of the Bitcoin supply was “underwater.” That’s practically nothing! Even as recently as January 18th, only a tiny 1.46% of Bitcoin was being held at a loss.

But things have shifted. CryptoQuant’s numbers show a steady climb in that “underwater” percentage since January 18th. This rise seems to be tied to wider economic anxieties that are weighing down crypto prices in general. Right now, Bitcoin is hovering around $76,880.56, having dipped 3.7% in the last day. Ethereum is also feeling the pressure, down 8.1% over the same period, according to CoinGecko. The markets seem to be reacting to events like U.S. President Donald Trump’s new tariffs on Chinese goods, which went into effect on Tuesday.

We haven’t seen this much Bitcoin in the red since around September 6th of last year, when it almost reached 30%. Interestingly, even though Bitcoin’s current trading price is significantly higher than it was back then (around $56,000 on September 6th), the proportion of “underwater” Bitcoin is still stubbornly similar.

One possible explanation for this? Think back to late 2024 and early 2025 – we saw a huge influx of cash into Bitcoin, driven by the crypto bull market that coincided with President Trump’s election and prices reaching record highs. Many people likely bought in during that peak.

Looking at the bigger picture, the amount of Bitcoin “underwater” does tend to move somewhat in sync with Bitcoin’s price over the years. However, it also gives us a glimpse into when different types of investors – from casual speculators to serious institutions – decided to jump into the market and at what price they bought in.

Speaking of institutions, they don’t seem to be rushing to buy Bitcoin at these prices. In fact, data from Farside Investors reveals that a hefty $326.3 million flowed out of Bitcoin ETFs just yesterday. And overall, Bitcoin ETFs have seen more outflows than inflows for seven out of the last eight days.

Investors have had it worse before

Okay, so a large chunk of Bitcoin investors are currently seeing red compared to recent highs. But it’s important to keep things in perspective – it’s not all doom and gloom. Things are still considerably better than they’ve been during some of the real downturns in the crypto world’s history.

Remember the chaos around the FTX exchange collapse back in November 2022? During that period of intense market fear, over 56% of Bitcoin investors were “underwater.”

Edited by Stacy Elliott.