More Than Half of Bitcoin Supply Is Underwater, K33 Data Show — a Signal That Has Flagged Prior Bear Market Bottoms

More than half of bitcoin's ($BTC) circulating supply is currently trading at a loss, according to research firm K33 — a threshold the firm says has historically appeared only near the floor of major bear markets. K33 notes that prior cycle bottoms have tended to follow within weeks of this signal being triggered, though the firm's data suggest the final turn lower often comes first.

What the On-Chain Data Actually Show

The metric in question tracks whether each coin last moved at a price higher or lower than the current market rate. When more than half the circulating supply is in the red on that basis, it means the majority of holders who transacted are sitting on losses. That is not a sentiment measure or a survey — it is a read of the blockchain itself, denominated in units of supply rather than dollars.

K33's finding puts bitcoin past that majority-underwater mark. The firm stops short of calling a bottom; what it identifies is a condition that has, in past cycles, accompanied the late stages of a bear market.

The Catch Buried in the Qualifier

The part of K33's read worth dwelling on is the phrase "often after a final leg lower." That is doing a lot of work. It is the difference between a signal that says the worst is behind you and one that says the worst is probably close — but may get worse first.

That asymmetry matters for anyone interpreting this as a buying prompt. Every prior instance where more than half the supply went underwater did eventually precede a recovery. But the path there included, by K33's own framing, a further drawdown that shook out additional holders before the floor held. The signal identifies a zone, not a date.

Who Is Still Selling

The implied question behind any capitulation metric is who remains on the other side of the trade. When a majority of supply is underwater, sellers are, by definition, realizing losses. At some point the pool of motivated sellers — those who bought higher and are willing to exit at a loss — runs thin. That exhaustion is mechanically what ends a bear leg. K33's data suggest bitcoin may be approaching that point, though the firm does not claim it has arrived.

For now the on-chain picture is one of a market dominated by holders in the red, a condition that history says tends to resolve — just rarely cleanly, and rarely on schedule.