Bitcoin Nears Cycle Bottom as Over Half of Supply is Held at a Loss

According to a report by K33, a digital asset brokerage company, over 50% of the circulating Bitcoin supply is currently being held at a loss. This suggests that the crypto market is nearing its cycle bottom. Historically, when more than half of the circulating supply has been underwater, Bitcoin has tended to be in the late stages of a bear market.

The report notes that previous bear markets typically bottomed within weeks of more than half of Bitcoin's supply being held at a loss. For example, during the 2017 bear market cycle, Bitcoin bottomed 31 days after over 50% of the BTC supply was held at a loss. Similarly, Bitcoin bottomed 23 days after half the supply was held at a loss in November 2018 and about 13 days after the same development in November 2022.

However, the 2014 cycle was an outlier, as Bitcoin only bottomed 101 days after half the supply was held at a loss. It was also the only cycle in which Bitcoin was lower one year after the signal, falling 25%.

Other indicators are also suggesting an imminent bottom, such as the Block Scholes Risk Appetite Index, which measures bullish and bearish momentum in digital assets. The index has fallen to a low of -1.27 and has since bounced higher, which historically preceded a median spot return of 12% over the following 100 days.

The report also notes that large sellers, such as spot Bitcoin exchange-traded fund (ETF) holders, could make this cycle behave differently from previous ones due to their impact on price. The spot Bitcoin ETFs registered two consecutive days of inflows, with $265 million on Monday, but saw $4.51 billion in net outflows in June, marking their worst month on record.

In conclusion, while there are signs that Bitcoin is nearing its cycle bottom, investment decisions should be made with caution, taking into account market conditions and external factors.

The Future of Crypto: Cycle Bottom or New Beginning?,

The future of the crypto market is being shaped by these developments, with investors and experts closely watching. The signs that Bitcoin is nearing its cycle bottom could raise hopes for a new bull market. However, market conditions and external factors must be carefully evaluated.