K33 says more than 50% of Bitcoin’s circulating supply is now underwater, a condition that has often shown up near the end of previous bear markets. The firm said this supply-in-loss threshold has historically been followed by a market bottom within weeks, making it a closely watched signal for whether selling pressure is starting to fade.
According to K33, periods in which most circulating Bitcoin sits at a loss have tended to line up with the final phase of bearish cycles. That pattern is now back in focus. It does not confirm that the low is in, but it places the market in a zone that has mattered in earlier downturns.
How quickly past cycles found a low
K33’s data shows that after this signal appeared in the 2017 bear market, Bitcoin reached its bottom 31 days later. In November 2018, the low arrived after 23 days. In November 2022, it took about 13 days. The 2014 cycle stands apart: the bottom formed 101 days later, and Bitcoin still fell an additional 25% a year after the signal appeared.
The firm also noted that Bitcoin’s advance over the past year has been more muted than in earlier bull cycles. That matters here. K33 said the current pullback may prove less severe than the drawdowns seen in past market cycles.
Spot ETF flows could change the pattern
K33 warned that this cycle may not track older ones cleanly because of large-scale selling pressure and the growing impact of spot Bitcoin ETF investors. Those flows can distort historical comparisons, especially when they arrive in size. The firm said it continues to monitor both on-chain and derivatives data.
Data from Farside Investors shows spot Bitcoin ETFs posted net inflows for two straight trading days. On Monday alone, the products recorded $265 million in net inflows. Even so, June as a whole saw $4.51 billion in net outflows, the weakest month on record for these ETF products.
Risk appetite data is sending a similar message
The supply-in-loss measure is not the only indicator pointing toward a possible floor. Block Scholes’ Risk Appetite Index, which tracks the strength of bullish and bearish trends across digital assets, is showing a similar setup.
Block Scholes said Bitcoin’s risk appetite fell to -1.27 on July 3 before rebounding. Across the eight previous cases studied by the firm, the median spot return over the following 100 days after a similar reversal was 12%. A spokesperson for the company said moves like these have often come before a broader recovery in spot prices and renewed allocation toward riskier assets such as crypto.
Taken together, the K33 and Block Scholes readings suggest Bitcoin may be nearing a cycle low. Still, ETF-driven flows could affect both the timing and the depth of any remaining downside, and K33 said the current market environment differs from prior cycles in several important ways.