K33: Bitcoin Cycle Bottom Nears as Loss-Making Supply Exceeds 50%
K33 report shows over 50% of Bitcoin supply is held at a loss, a metric historically preceding cycle bottoms within weeks. ETF outflows could alter the pattern, but Block Scholes’ risk appetite index also points to an imminent bottom and potential 12% return.
Quick Take
Over 50% of BTC supply is underwater, signaling a potential bottom.
Past cycles bottomed within 13-31 days after this signal.
Spot Bitcoin ETFs saw record $4.51B outflows in June.
Block Scholes risk appetite index suggests a 12% median return ahead.
Market Impact Analysis
BullishHistorical on-chain metric signals that Bitcoin is in a late-stage bear market and typically precedes a bottom, suggesting a bullish reversal soon.
Speculation Analysis
Key Takeaways
- Over 50% of Bitcoin supply is underwater, a metric that has historically preceded cycle bottoms within weeks.
- Past cycles bottomed 13–31 days after this signal, but record $4.51B ETF outflows in June could distort the pattern.
- The Block Scholes Risk Appetite Index hit a low of -1.27, historically preceding a 12% median return over 100 days.
- K33 suggests the current downturn could be less severe as the prior bull market was less extreme.
What Happened
Bitcoin’s relentless price slide has pushed more than half of all circulating supply into an unrealized loss, according to digital asset brokerage K33. The milestone, a hallmark of late-stage bear markets, suggests that selling pressure may be nearing exhaustion. Historically, this metric has preceded cycle bottoms within a matter of weeks. The report notes that because the preceding bull market was less extreme than prior cycles, the current downturn might be milder. Still, the presence of spot Bitcoin ETFs introduces a new variable that could alter the timing and depth of any recovery.
The Numbers
More than 50% of Bitcoin supply is now held at a loss. In the 2017, 2018, and 2022 cycles, the market bottomed 31, 23, and 13 days respectively after this threshold was breached. The 2014 cycle was an outlier, taking 101 days, and Bitcoin was still down 25% one year later. Spot Bitcoin ETFs recorded $4.51 billion in net outflows in June, the worst monthly figure on record, though $265 million in inflows arrived on Monday. Separately, the Block Scholes Risk Appetite Index hit -1.27 on July 3—a deeply fearful reading that in eight prior instances heralded a median spot return of 12% over 100 days.
Why It Happened
The surge in supply held at a loss is a direct consequence of Bitcoin’s price decline from recent highs, compounded by macro uncertainty, miner capitulation, and the heavy ETF outflows seen in June. When the majority of coins are underwater, it often signals that weak hands have sold and remaining holders are reluctant to sell lower. This creates a supply squeeze as demand slowly returns. Analyst note that extreme fear in the market, as measured by the risk appetite index, historically marks turning points where downside risk is limited and upside potential grows.
Broader Impact
The signal comes at a critical juncture for institutional adoption. Record ETF outflows show that traditional finance flows can amplify Bitcoin’s downside, potentially lengthening the bottoming process. However, if the historical pattern holds, the next few weeks could offer a prime accumulation window. The Block Scholes index adds a quantitative edge, suggesting the market is pricing in a meaningful bounce. Whether ETF holders will buy back in to fuel a rally remains to be seen, but the data implies a tradable low is forming.
What to Watch Next
- Support holds: Bitcoin must defend current levels and reclaim key moving averages to confirm the historical bottoming pattern.
- ETF flows reverse: A sustained return of inflows to spot Bitcoin ETFs would signal renewed institutional appetite and could accelerate a recovery.
- Risk appetite rises: If the Block Scholes index continues to climb from its July 3 low, a 12% median return over 100 days becomes a high-probability scenario.
This article is for informational purposes only and does not constitute financial advice.
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