Bitcoin appears to be approaching a critical juncture as short-term traders face significant unrealized losses during this bull cycle.
Traders who have held Bitcoin (BTC) for one to three months are currently experiencing losses of 20% to 25% for over two weeks, indicating the peak pain level of this market cycle, as noted by CryptoQuant analyst Darkfost.
“Typically, when a significant number of them capitulate, as observed in recent weeks, that’s when accumulating becomes intriguing,” he stated in a Monday report.
This group will remain at a loss until BTC rises above its realized price of approximately $113,692, Darkfost highlighted.
Many leading financial institutions maintain a positive outlook on Bitcoin’s path towards 2026, despite the present market downturn.
On Monday, Grayscale, a major asset management firm, suggested that Bitcoin’s current dip indicates a local bottom in anticipation of a recovery in 2026, which would challenge the four-year cycle theory, according to the company.
Related: Cathie Wood remains optimistic with $1.5M Bitcoin price target: Finance Redefined
Bitcoin ETF only constituted up to 3% of selling pressure: ETF analyst
Despite earlier worries about substantial sales from spot Bitcoin exchange-traded fund (ETF) holders, these ETFs represent merely a small portion of the selling pressure contributing to Bitcoin’s price drop.
“According to Citi analysts, for every $1 billion withdrawn from Bitcoin ETFs, it leads to approximately a 3.4% drop in Bitcoin’s price. By that logic, since ETFs have seen over $22.5 billion in inflows year-to-date, BTC should have surged by 77% this year,” wrote Bloomberg ETF analyst Eric Balchunas in a Monday post on X.
“ETFs have accounted for about 3% of the total selling peaks.”
Related: Bank of America endorses a 1%–4% crypto allocation, paving the way for Bitcoin ETFs
In the meantime, Bitcoin ETFs have started to recover from the $3.48 billion in total outflows noted in November, which was the second-worst month on record.
On Tuesday, Bitcoin ETFs registered $58 million in net positive inflows, marking the fifth consecutive day of positive inflows, according to Farside Investors data.
These modest inflows may persist as Bitcoin trades above the $89,600 flow-weighted cost basis for ETF purchasers, indicating that the average holder is no longer experiencing paper losses.
In terms of other U.S. crypto funds, spot Ether (ETH) ETFs witnessed $9.9 million in outflows on Tuesday, while Solana (SOL) ETFs faced $13.5 million in net negative outflows, per Farside Investors.
Magazine: Finding Satoshi — Discovering Satoshi would harm Bitcoin
