Bitcoin 

BTC

$18,820

 hodlers face a crucial week in more ways than one as $42,000 rekindles a familiar battle.

As noted by on-chain analytics firm Glassnode on Monday, 30% of the BTC supply is now at a loss — historically, this has been a key number to defend for bulls.

Mixed opinions on rebound chances

Bitcoin’s descent from $69,000 to current levels — at one point over 40% — is nothing unusual, but for long-term investors, there is a specific reason to hope that current support holds.

Looking back at historical price performance, Glassnode reveals that once 30% of the supply goes “underwater,” price rebounds often occur.

“As the bears apply pressure to the in-profit cohort of holders, Bitcoin bulls are defending a historically significant level of the Percent of Supply in Profit metric,” staff explained in the latest edition of its weekly newsletter, “The Week On-Chain,” describing bulls as “under siege.”

“This magnitude of ‘top heavy supply’ was defended in two instances in the last few years.”

These were the post-COVID-19 market crash in March 2020 and summer 2021 in the aftermath of the China mining crackdown. The 30% in-loss level resulted in an upside impulse move for spot price in both instances.

Continuing, Glassnode acknowledged that the same result is nonetheless far from guaranteed this time around.

“The reaction from this level will likely provide insight into the medium-term direction of the Bitcoin market,” the newsletter continued.

“Further weakness may motivate these underwater sellers to finally capitulate, whereas a strong bullish impulse may offer much needed psychological relief, and put more coins back into an unrealized profit.”

Others were more optimistic, with fellow on-chain platform CryptoQuant expecting a bullish outcome.

“The bull run in July had just begun when it had previously risen to these levels. The bulls are aggressively preparing for the new run,” a blog post argued about the profit-to-loss ratio.

“A hodler-dominated market”

Earlier, Cointelegraph reported on the continued steely resolve by both long-term holders (LTH) and miners when it comes to preserving their assets.

Related: What bear market? Current BTC price dip still matches previous Bitcoin cycles, says analyst

With short-term holders (STH) — defined by Glassnode as coins moving in the past 155 days — staying low as a proportion of the overall supply, hope remains that the worst of the capitulation following all-time highs has been and gone.

“The supply held by this cohort sits at ~3 million BTC, a relative historical low, and a level that signifies a transition into a HODLer dominated market,” the newsletter continued.

“This has been in effect since the May 2021 deleveraging event. Low STH supply levels are typical of bearish trends, as old coins remain dormant, and younger coins are slowly accumulated by high conviction buyers.”