Bitcoin’s market is showing signs of nearing a cycle bottom as over half of its circulating supply is held at a loss, according to a new report by digital asset broker K33. This historic metric typically indicates that selling pressure may be nearing its peak, with previous cycles bottoming shortly after this threshold was crossed.
Examining past bear markets, K33 found a consistent pattern: when more than 50% of Bitcoin was underwater, the cycle low followed within weeks. In 2017, Bitcoin reached its bottom about a month after crossing this mark. Similarly, in November 2018 and November 2022, Bitcoin bottomed within 23 and 13 days respectively after the same condition was met. The 2014 cycle was a notable exception, with the bottom arriving after more than three months, and Bitcoin’s price still declining in the year following the signal.
Despite this strong historical precedent, K33 cautioned that the current cycle may differ due to the influence of large sellers, particularly holders of spot Bitcoin exchange-traded funds (ETFs). These ETFs experienced significant net outflows recently, which could affect market dynamics compared to previous cycles. Data from Farside Investors shows that, while Monday saw inflows of $265 million into spot Bitcoin ETFs, June recorded a record $4.51 billion in net outflows.
Additional indicators reinforce the notion of an impending market bottom. The Block Scholes Risk Appetite Index, which gauges bullish and bearish momentum, hit a low point in early July before climbing. Historically, similar rebounds from lows around -1.27 were followed by median spot price gains of approximately 12% over the next 100 days. This pattern suggests renewed investor interest in risk assets like cryptocurrencies.
These converging signals—over half the supply at a loss and risk appetite bouncing from lows—offer a technical and behavioral snapshot of Bitcoin’s market condition, potentially marking the late stages of the current bear cycle.