Over Half of All Bitcoin Is Underwater — and K33 Says the Four-Year Cycle May Be Dead

More than half of all Bitcoin in circulation is currently sitting at a loss — and according to new research from crypto analytics firm K33, that might be the most bullish signal the market has seen all year. The finding comes as Bitcoin trades near 63,219 USD, down roughly 41 percent from its October 2025 peak of 126,198 USD, and it suggests the world’s largest cryptocurrency may be approaching the bottom of its current cycle faster than anyone expected.

By Marcus Johnson | July 17, 2026

The Hook

If you bought Bitcoin anytime between November 2025 and today, there is a better-than-even chance your position is underwater. That is not speculation — it is the conclusion of fresh on-chain analysis from K33 Research, the Scandinavian crypto analytics firm that has become one of the most closely watched voices in digital asset markets. Their latest report finds that more than 50 percent of Bitcoin’s circulating supply is now trading below its last acquisition price, a threshold that has historically marked the final stages of a bear market.

For regular investors, this matters enormously. Every previous time Bitcoin has reached this level of underwater supply — in 2015, 2018, and 2022 — it was within months of a cycle bottom. The implication is straightforward: the sellers who were going to give up have largely given up. What remains are holders with stronger conviction, and that sets the stage for recovery.

But this cycle has a twist that previous ones did not. K33’s analysis comes alongside a broader argument, echoed by CoinDesk reporting on July 17, that Bitcoin’s famous four-year halving cycle may not repeat in its traditional form. And the reason points directly to the biggest structural change in crypto history: the arrival of institutional ETF money.

On-Chain Evidence

The numbers paint a picture of a market that has been stressed but has not broken. Bitcoin started 2026 trading above 93,000 USD, endured a brutal June that took it to roughly 60,000 USD, and now hovers around 63,219 USD. The drawdown from the all-time high sits at approximately 41 percent — and here is where things get interesting for anyone comparing this cycle to previous ones.

• 2013 cycle peak to trough: approximately minus 86 percent
• 2017 cycle peak to trough: approximately minus 84 percent
• 2021 cycle peak to trough: approximately minus 77 percent
• 2025 cycle drawdown so far: approximately minus 41 percent — by far the shallowest on record

That is a staggering divergence. In every previous cycle, Bitcoin’s bear markets were characterized by capitulation — panic selling that drove prices down by three-quarters or more. This time, the floor has held up remarkably well. The half-supply-at-a-loss metric suggests significant financial pain among recent buyers, but the absence of a cascading crash implies that something structural has changed about how Bitcoin trades.

K33’s findings align with research from Grayscale, Bitwise, and Fidelity Digital Assets, each of which has published reports arguing that the four-year cycle — the predictable boom-and-bust pattern tied to Bitcoin’s halving events — has been fundamentally weakened. The halving’s supply shock still matters mathematically, but it is now dwarfed by a much larger force.

The Core Conflict

The force rewriting Bitcoin’s DNA is institutional capital, channeled primarily through spot Bitcoin ETFs. When the SEC approved 11 spot Bitcoin ETFs for U.S. trading on January 10, 2024, it created something the crypto market had never had before: a regulated, tax-efficient on-ramp for trillions of dollars of institutional money that had been sitting on the sidelines.

The numbers are staggering. According to data from CoinGlass, cumulative net inflows into spot Bitcoin ETFs surpassed 60 billion USD within roughly two years of launch. BlackRock’s iShares Bitcoin Trust (IBIT) alone reached approximately 66.9 billion USD in assets under management by May 2026, making it one of the fastest-growing ETF products in financial history. Fidelity’s FBTC followed at roughly 17 billion USD.

By January 2026, spot Bitcoin exchange-traded products collectively held nearly 1.3 million BTC — about 6.4 percent of all Bitcoin in circulation. To put that in perspective, these funds now control more Bitcoin than Satoshi Nakamoto’s legendary wallet. And according to Amberdata, the daily demand from ETFs routinely runs at roughly 12 times the amount of new Bitcoin being created by miners each day.

This creates a fundamental tension. On one side, you have the traditional crypto believers who argue the four-year cycle is destiny — that Bitcoin is due for a deeper crash before the next bull run. On the other, you have Wall Street analysts and on-chain researchers saying the institutional bid has fundamentally changed the supply-demand dynamic, making a repeat of the 77-percent-crash scenario increasingly unlikely.

The data backs the institutional camp. Trading platform Coinbase reported that institutional customers now account for approximately 83 percent of its total trading volume, up from roughly 50 percent in 2020. In a single quarter — Q2 2025 — institutional volume on Coinbase reached 194 billion USD. Meanwhile, CME Group has seen Bitcoin derivatives average hundreds of thousands of contracts per day in 2026, cementing its role as the dominant venue for institutional crypto exposure.

Market Implications

For everyday investors, the K33 data and the cycle debate translate into a very practical question: Is this the bottom, or is there more pain ahead? The answer depends on which framework you trust.

If the four-year cycle is truly dead, then the shallow 41-percent drawdown may be all she wrote. The market has already absorbed the selling pressure from disappointed bulls, miners trimming operations, and macroeconomic headwinds including war in the Middle East and persistent inflation fears. With more than half the supply underwater and sellers largely exhausted, the path of least resistance shifts upward — especially as ETF inflows continue to absorb available supply.

If the cycle is merely delayed rather than dead, investors face a trickier outlook. A final capitulation flush — the kind that marked previous cycle bottoms — could still be coming. Bulls would point to the fact that Bitcoin has already defied historical precedent by refusing to crash further despite negative macro catalysts. The asset’s resilience through geopolitical turmoil and a broader risk-off environment in traditional markets suggests the institutional bid is providing a genuine price floor.

What is clear is that the composition of Bitcoin holders has fundamentally changed. The retail-driven volatility that produced 80-percent crashes in 2013 and 2017 is a feature of a smaller, less mature market. When institutional players managing hundreds of billions of dollars become the dominant holders, their behavior is different. They do not panic-sell on a 20-percent dip. They average down, they hedge with derivatives, and they hold for multi-year horizons. That behavioral shift is visible in the data: Bitcoin’s realized volatility has been trending lower even as its market cap has grown.

There is also the macro picture to consider. Federal Reserve policy remains the single biggest outside driver of Bitcoin prices. Weak U.S. jobs data has reignited hopes for rate cuts, which would typically be bullish for risk assets including crypto. The Fed’s next decision on July 28 looms large over the market, and any dovish surprise could be the catalyst that pushes Bitcoin back above key resistance levels.

The Verdict

K33’s research does not guarantee that Bitcoin has bottomed. Nobody can call a cycle floor with certainty, and anyone who claims to be doing so is selling something. But the data does support a compelling thesis: the old playbook may not apply anymore.

The combination of record underwater supply, a historically shallow drawdown, and relentless institutional accumulation through ETFs paints a picture of a market that is stressed but structurally healthier than ever before. If you are a long-term believer in Bitcoin, the current environment — with prices near 63,219 USD and more than half of holders sitting on losses — has historically been the zone where patient investors were rewarded.

The four-year cycle may not be dead, but it is clearly evolving. And for the first time in Bitcoin’s history, the people deciding where it goes next are not crypto Twitter traders — they are portfolio managers at the largest financial institutions on Earth. That is not a guarantee of higher prices. But it is a reason to think the old rules about inevitable 80-percent crashes may need an update.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.