Bitcoin may be approaching a pivotal moment as short-term holders endure the steepest unrealized losses of the current bull market.
Investors who have held BTC for one to three months are facing losses of 20% to 25% for more than two weeks — the deepest drawdown this group has experienced this cycle, according to CryptoQuant analyst Darkfrost.
“When a significant share of these traders capitulates, as we’ve seen recently, it often marks a compelling accumulation opportunity,” Darkfrost wrote in a note on Monday.
He added that this group won’t break even until Bitcoin climbs back above its realized price of roughly $113,692.
Some of the world’s largest financial institutions remain bullish on Bitcoin’s outlook for 2026, despite the ongoing market correction.
On Monday, asset manager Grayscale suggested that the current drawdown may signal a local bottom ahead of a 2026 recovery — a scenario that would challenge the traditional four-year cycle theory, the firm noted.
Meanwhile, concerns over heavy selling from spot Bitcoin ETFs appear overstated. According to ETF analyst Eric Balchunas, these funds have contributed only a small fraction of the downward pressure on Bitcoin.
“I read that Citi analysts estimate that every $1 billion withdrawn from Bitcoin ETFs corresponds to about a 3.4% drop in Bitcoin’s price. By that logic, since ETFs have seen $22.5 billion in inflows YTD, BTC should actually be up 77% this year,” Balchunas wrote on X Monday.
Bitcoin ETFs are beginning to rebound after experiencing $3.48 billion in cumulative outflows during November, the second-worst month on record.
On Tuesday, the funds saw $58 million in net inflows, marking the fifth consecutive day of positive inflows, according to Farside Investors.
These modest inflows may continue if Bitcoin climbs back above the flow-weighted cost basis of roughly $89,600 for ETF holders, allowing the average investor to move out of unrealized losses.
Meanwhile, other U.S. crypto funds showed mixed activity: spot Ether ETFs posted $9.9 million in outflows on Tuesday, while Solana ETFs recorded $13.5 million in net outflows, according to Farside Investors.
