Bitcoin nears cycle bottom as over 50% of supply held at loss
In brief
- K33 reports over 50% of Bitcoin supply currently held at a loss
- Historical cycles show Bitcoin bottomed 13–101 days after this threshold
- Spot Bitcoin ETFs recorded $4.51 billion net outflows in June
- Bitcoin risk appetite hit -1.27 on July 3, historically preceding 12% median returns
- Past bull market was less extreme, suggesting current downturn may be milder
Historical bottoming patterns
K33 said Bitcoin has historically bottomed within weeks of more than half of its circulating supply being held at a loss. The timing varies across cycles. During the 2017 bear market, Bitcoin bottomed 31 days after over 50% of the BTC supply was held at a loss. In November 2018, the bounce came faster—Bitcoin bottomed 23 days after half the supply was held at a loss. The most recent cycle showed the quickest recovery, with Bitcoin bottoming about 13 days after the same development in November 2022.
The 2014 cycle was an outlier, as Bitcoin only bottomed 101 days after half the supply was held at a loss. More concerning, it was also the only cycle in which Bitcoin was lower one year after the signal, falling 25%. In all other cases, strong one-year returns followed the metric.
Market stress signals ease
Recent data points suggest selling pressure may indeed be approaching exhaustion. Spot Bitcoin ETFs saw $4.51 billion in net outflows in June, marking their worst month on record according to Farside Investors. That capitulation has since reversed—Bitcoin's risk appetite fell to a low of -1.27 on July 3, a reading that historically preceded a median spot return of 12% over the following 100 days.
K33 added context on cycle severity. The past year's bull market was less extreme than previous cycles, suggesting the current downturn could be milder as well. That observation implies the recovery window—typically 13 to 31 days in recent cycles—may hold even if the absolute price bottom differs from prior bear markets.
Frequently asked questions
Why does the supply held at a loss matter for Bitcoin?
When more than half of Bitcoin's supply is underwater (bought at higher prices), it signals late-stage bear markets where selling pressure is nearing exhaustion. Historically, this metric has preceded Bitcoin bottoms within weeks and strong one-year recoveries in most cycles.
How long does Bitcoin typically take to bottom after this signal?
Recovery timing varies. Recent cycles saw bottoms within 13 to 31 days of the metric appearing. The 2014 cycle was an outlier at 101 days. In all cycles except 2014, Bitcoin posted strong gains one year after the signal.
What other indicators suggest Bitcoin may be bottoming now?
Spot Bitcoin ETF outflows hit a record $4.51 billion in June, and Bitcoin's risk appetite fell to -1.27 on July 3—a level that historically preceded median 12% returns over the next 100 days.
