Bitcoin Supply Held at Loss Tops 50% as Cycle Bottom Nears

K33 Report on Bitcoin Market Conditions

Digital asset brokerage K33 has noted that more than 50% of Bitcoin's circulating supply is now held at a loss. This development comes as part of their H1 2026 roundup and points to conditions seen in the later parts of previous bear markets.

The metric serves as one way to track when selling pressure may start to ease, based on the distribution of unrealized losses across holders. K33 observes that such periods have aligned with late-stage bear market phases in Bitcoin's history.

Differences in the Current Cycle

K33 points out that the previous year's price increase was less pronounced than in earlier bull markets. This could mean the current downturn might not reach the same depth as those seen before.

However, new factors such as spot Bitcoin ETF activity introduce variables not present in prior cycles. Large institutional flows through these products can affect price movements in ways different from traditional holder behavior.

Supporting Indicators from Other Sources

Additional measures align with the supply-at-loss signal. Block Scholes' Risk Appetite Index, which tracks momentum in digital assets, dropped to -1.27 on July 3 before recovering. In eight previous similar instances, this pattern preceded a median 12% return in Bitcoin's spot price over the next 100 days.

K33's analysis combines on-chain data with these momentum indicators to assess the broader market state. The firm continues to monitor how ETF flows and risk sentiment evolve in the coming period.

Historical Context of the Metric

Analysts have long used the percentage of supply held at a loss to evaluate market stress levels. When a majority of coins trade below their purchase prices, it often corresponds to points where widespread capitulation may be nearing completion.

This current reading above 50% places Bitcoin in a zone observed multiple times before market recoveries in past cycles, though outcomes can vary based on external conditions.