An analysis says more than half of bitcoin in circulation is now being held at a loss, suggesting the cycle’s bottom may be near.

Cointelegraph reported on Monday that digital asset broker K33 said in a report that more than 50 percent of total bitcoin supply has moved into loss.

K33 said the metric has often been used as a signal pointing to the later stages of a bitcoin bear market. When more than half of the circulating bitcoin supply is underwater, it can be used to judge whether selling pressure is nearing exhaustion, it said. K33 said a similar pattern repeated in past bear markets, adding that bottoms generally formed within weeks after more than half of supply entered loss.

In past cases, the 2017 bear market bottomed 31 days after the signal appeared. In November 2018, a low came 23 days later, and in November 2022 about 13 days later. The 2014 cycle was an exception. The bottom formed only after 101 days, and the return after 1 year fell 25 percent, showing a different pattern from earlier cases.

K33 also mentioned the possibility that the scale of the current correction may be more limited than in the past. It said the rally over the past year was not as overheated as previous cycles, so the current downswing may also unfold less extremely. It warned, however, that this cycle could move differently from past patterns because large sellers such as spot bitcoin ETF holders have a bigger impact on prices.

Actual money flows were mixed. Spot bitcoin ETFs posted net inflows of $265 million on Monday, extending net inflows for a second straight day. But for June overall, they recorded net outflows of $4.51 billion, the largest monthly outflow in Farside Investors data. That means that even if a short-term rebound signal has appeared, the direction of institutional funds has not fully turned yet.

Another indicator of market sentiment also pointed to the possibility of a bottom. Block Scholes' risk appetite index rebounded after falling to minus 1.27 on July 3. Block Scholes said that based on the previous eight cases, after such a move the median return of the spot price over the next 100 days was 12 percent.

A Block Scholes spokesperson said of the signal, "Historically it has often preceded a stronger upside edge in the spot price," and added, "Additional allocations of funds to risk assets such as cryptocurrencies could continue."

It was also raised that this market is difficult to compare simply with past cycles. Loss-held supply is expanding and the risk appetite index is rebounding at the same time, but ETF inflows and outflows and whether large investors sell can act as direct variables on the timing of a bitcoin bottom. As a result, the market is expected to watch not only on-chain indicators but also whether ETF fund flows move into recovery.