Short-term holders hit the deepest losses of the cycle while institutional sentiment begins to stabilize
Bitcoin’s latest market downturn has pushed short-term traders into their highest level of unrealized losses this cycle, signaling what analysts describe as a critical pressure point for the market. Despite the correction, spot Bitcoin ETFs are showing early signs of recovery, challenging assumptions that they were a major driver of the sell-off.
Bitcoin Unrealized Losses Reach Cycle High
According to on-chain research, traders holding Bitcoin for one to three months have been sitting on losses of 20% to 25%, a level not seen in the current bull phase. One market strategist explained that this depth of unrealized pain often precedes accumulation, noting that “once a significant share of short-term holders capitulates, market reversals become more likely.”
Analysts estimate these traders will remain underwater until Bitcoin climbs above its realized price near $113,692, underscoring how far the asset would need to rally to relieve pressure.
ETFs Accounted for Only a Small Portion of Selling
While some have pointed to ETF redemptions as a drag on price, experts argue their impact has been minimal. One ETF specialist highlighted that ETF flows made up only around 3% of total selling, adding that inflows for the year would imply a sharply higher Bitcoin price if ETF activity alone dictated market movement. He emphasized that “ETFs were a marginal contributor, not the core driver.”
ETF Inflows Turn Positive as Market Stabilizes
After November’s steep $3.48 billion outflows, spot Bitcoin ETFs have posted multiple consecutive days of net inflows, including $58 million on Tuesday as Bitcoin briefly reclaimed levels above the flow-weighted cost basis of roughly $89,600. This shift suggests the average ETF holder is no longer in a loss position.
Other U.S. crypto products showed mixed flows, with Ether ETFs recording $9.9 million in outflows and Solana ETFs seeing $13.5 million in net outflows.
As traders absorb peak unrealized losses and institutional flows stabilize, analysts say the market may be approaching a decisive inflection point heading into the next cycle.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.