Bitcoin appears to be approaching a critical juncture as short-term traders face significant unrealized losses during the ongoing bull cycle.
Traders who have held Bitcoin (BTC) for one to three months are currently experiencing losses of 20% to 25%, a situation lasting over two weeks, according to CryptoQuant analyst Darkfrost.
“Once a considerable number of them have capitulated, as seen in recent weeks, that typically marks an interesting opportunity for accumulation,” he mentioned in a Monday note.
This group will remain at a loss until BTC trades above its realized price of approximately $113,692, Darkfrost noted.
Some of the largest financial institutions continue to be optimistic about Bitcoin’s trajectory for 2026, despite the current downturn.
On Monday, asset management giant Grayscale asserted that Bitcoin’s current drawdown signals a potential local bottom ahead of a recovery in 2026 — a development that would challenge the four-year cycle theory, according to the firm.
Related: Cathie Wood remains optimistic about a $1.5M Bitcoin price target: Finance Redefined
Bitcoin ETF only contributed to 3% of selling pressure: ETF analyst
Despite prior warnings regarding large-scale sales from spot Bitcoin exchange-traded fund (ETF) holders, these funds accounted for only a minor portion of the selling pressure influencing Bitcoin’s price decline.
“I just read that Citi analysts say that for every $1 billion drawn from Bitcoin ETFs, it results in roughly a 3.4% price drop. Thus, according to this logic, since the ETFs have absorbed over $22.5 billion in inflows this year, BTC should be up 77%,” stated Bloomberg ETF analyst Eric Balchunas in a Monday X post.
“ETFs have only contributed to 3% of the total selling peaks.”
Related: Bank of America supports 1%–4% crypto allocation, paving the way for Bitcoin ETFs
Additionally, Bitcoin ETFs have begun to recover from the $3.48 billion in cumulative outflows recorded in November, which marked their second-worst month on record.
On Tuesday, Bitcoin ETFs recorded $58 million in net positive inflows, marking their fifth consecutive day of positive inflows, as per data from Farside Investors data.
These modest inflows may persist as Bitcoin trades above the approximately $89,600 flow-weighted cost basis for ETF buyers, indicating that the average holder is no longer experiencing paper losses.
In contrast, other US crypto funds have faced challenges, with spot Ether (ETH) ETFs experiencing $9.9 million in outflows on Tuesday, while Solana (SOL) ETFs recorded $13.5 million in net negative outflows, according to Farside Investors.
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