Bitcoin seems to be approaching a critical juncture as short-term traders experience the steepest unrealized losses observed in the current bull cycle.
According to CryptoQuant analyst Darkfost, short-term Bitcoin (BTC) traders who have held BTC for one to three months have been enduring losses between 20% and 25% for over two weeks, representing the highest stress point of the current market cycle.
“Typically, when a significant number of them have capitulated, as evident in recent weeks, that’s when the opportunity to accumulate becomes appealing,” he stated in a note on Monday here.
This group will remain at a loss until BTC trades above its realized price of approximately $113,692, Darkfost added.
Despite the ongoing correction, some of the largest financial institutions maintain a positive outlook for Bitcoin’s future in 2026.
On Monday, Grayscale, an asset management powerhouse, indicated that Bitcoin’s current drawdown suggests a potential local bottom ahead of a recovery in 2026, an outcome 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 accounted for just 3% of selling pressure: ETF analyst
Amid concerns regarding large-scale sales from Bitcoin exchange-traded fund (ETF) holders, these funds accounted for only a small fraction of the selling pressure that has led to Bitcoin’s price drop.
“I read that Citi analysts suggest for every $1 billion withdrawn from Bitcoin ETFs, there’s approximately a 3.4% decline in Bitcoin’s price. Therefore, given that the ETFs have seen +$22.5 billion in inflows YTD, BTC should logically be up 77% this year,” wrote Bloomberg ETF analyst Eric Balchunas in a post on Monday X.
“ETFs have only contributed about 3% of the total selling peaks.”
Related: Bank of America supports 1%–4% crypto allocation, paving the way for Bitcoin ETFs
Meanwhile, Bitcoin ETFs are starting to bounce back from the $3.48 billion in cumulative outflows recorded in November, which was their second-worst month on record.
On Tuesday, Bitcoin ETFs reported $58 million in net positive inflows, marking the fifth consecutive day of positive inflows, according to data from Farside Investors here.
These modest inflows are likely to continue as Bitcoin trades above the $89,600 flow-weighted cost basis for ETF buyers, meaning that the average holder is no longer facing paper losses.
Looking at other US crypto funds, spot Ether (ETH) ETFs experienced $9.9 million in outflows on Tuesday, while Solana (SOL) ETFs recorded a net outflow of $13.5 million, according to Farside Investors.
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