Bitcoin supply underwater hits 50% as K33 warns of final leg lower

More than half of Bitcoin's circulating supply is now held at a loss, a threshold historically reached only near major bear market bottoms.

Bitcoin's on-chain losses deepened as over 50% of its circulating supply traded below acquisition cost, a level K33 Research said has historically preceded cycle bottoms within weeks.

"The metric has only flashed at major turning points — March 2020, November 2022, and August 2024 — each time followed by a final leg lower before a sustained recovery," Vetle Lunde, head of research at K33, said.

Bitcoin last changed hands near $60,000, down more than 52% from its all-time high of $126,000, according to CoinGecko data as of 14:30 UTC. The percentage of supply in profit fell below 50% for the first time since the FTX collapse in November 2022, when Bitcoin bottomed near $15,500 before rallying 170% over the following 12 months.

The signal does not rule out further downside. In prior cycles, the metric preceded an additional 15% to 25% decline over one to four weeks before a durable floor formed, per K33's analysis. A move below $50,000 would open the path toward the $40,000 to $46,000 range that Galaxy Digital has flagged as a potential cycle bottom by the fourth quarter of 2026.

Open interest across major derivatives exchanges stood at $28.4 billion as of Tuesday, down from $38.7 billion at the start of the year, Coinglass data showed. Funding rates on Binance and OKX flipped negative for the first time since August 2024, indicating that short sellers are paying to maintain positions — a setup that has historically preceded short squeezes when a bottom forms.

Spot Bitcoin ETFs listed in the US have recorded net outflows of $4.2 billion over the past six weeks, according to data from The Block. The Grayscale Bitcoin Trust alone saw $1.8 billion exit during the period, while BlackRock's IBIT and Fidelity's FBTC experienced their first sustained redemption streaks since launching in January 2024.

On-chain data points to accumulation

Despite the price pressure, wallets holding at least 100 BTC — a cohort often associated with long-term holders and institutional custody — have increased their aggregate balance by 52,000 BTC over the past 30 days, Glassnode data showed. The divergence between falling prices and rising whale balances mirrors patterns observed in the fourth quarter of 2022, when accumulation preceded the 2023 recovery.

The realized cap, a metric that values each unspent transaction output at its last transaction price, has declined to $560 billion from its November 2025 peak of $720 billion, reflecting the extent of unrealized losses across the market. Short-term holders — wallets that moved coins within the past 155 days — are carrying an aggregate loss of $18.3 billion, the largest since the COVID-19 crash in March 2020.

What to watch next

K33's analysis suggests the next two to four weeks are critical. If the supply-in-loss metric holds above 50% for more than 30 consecutive days — a scenario that has never occurred — it would signal a structural breakdown beyond typical cycle dynamics. Conversely, a rapid recovery above 60% of supply in profit within two weeks would mirror the August 2024 pattern, when Bitcoin rebounded 35% over the following 45 days.

The next macro catalyst arrives June 18 with the Federal Reserve's rate decision. Fed funds futures currently price a 72% probability of a hold at 4.25% to 4.50%, according to CME data. A dovish surprise could trigger the short-squeeze setup that negative funding rates have primed.

This article is for informational purposes only and does not constitute investment advice.