Why Supply Loss Metrics for BTC, ETH, and SOL Are Overstated—What the Data Actually Shows

The Real Story Behind Record Loss Levels

Glassnode’s latest data reveals that Bitcoin, Ether, and Solana are hitting record highs in supply held at a loss. Sounds alarming, right? But here’s the twist: when you dig deeper, the actual liquid supply under real pressure is far smaller than the raw numbers suggest. Institutional holdings, staking commitments, and locked reserves paint a completely different picture.

Bitcoin: Loss Levels Don’t Tell the Whole Story

Let’s start with Bitcoin. Around 35% of BTC’s supply sits underwater—a level we last saw when prices hovered near $27,000. Yet this figure masks the reality.

The circulating supply stands at approximately 19.95 million BTC. Institutions and ETFs control roughly 3.73 million BTC. On top of that, estimates point to 3.0 to 3.8 million BTC permanently lost from circulation—that’s 15% to 19% of total supply gone for good.

When you factor these out, you’re removing about one-third of Bitcoin’s active supply from the liquidity equation. Translation: the actual selling pressure available in the short term is nowhere near what the raw loss percentage implies.

Ether’s Staking Barrier

Ether presents a similar dynamic. While 37% of ETH is held at a loss, over 40% is locked in staking contracts, ETFs, or institutional reserves. This locked supply doesn’t respond to every market dip—institutional players move slowly and strategically.

The freely tradable Ether vulnerable to panic selling from losses? Much smaller than the headline figure suggests. Most of the underwater ETH is essentially immobilized, cushioning real market impact.

Solana’s Extreme Case

Solana shows the most dramatic gap between perception and reality. Around 70% of circulating SOL trades below purchase price. But here’s the key detail: over 73% of the supply is staked or held within institutional products.

This means the majority of Solana’s supply is locked away and immobile. When SOL crashed to $121, the loss percentage briefly spiked to 80%—a level last seen near $20 prices. This sensitivity reveals these metrics respond more to rapid price swings than to structural market shifts.

What This Means for Market Risk

The takeaway? Perceived threats from widespread loss-driven selling pressure are being overstated by looking at raw supply figures alone.

The actual liquid supply capable of generating panic selling under market stress is substantially lower once you account for staking arrangements, institutional holdings, and permanently lost coins. These structural factors create natural friction against cascading sell-offs.

This analysis highlights why on-chain metrics require nuanced interpretation. Raw supply data alone misses the institutional and structural barriers that genuinely limit short-term volatility. Understanding these layers separates signal from noise in crypto market risk assessment.

Current Circulating Supply:

• Bitcoin: 19,976,296 BTC
• Ethereum: 120,694,650 ETH
• Solana: 565,322,872 SOL