Bitcoin may be approaching a crucial juncture as short-term traders grapple with substantial unrealized losses, marking the toughest period of the current bullish market. Data from CryptoQuant’s analyst Darkfost indicates that those who have held Bitcoin (BTC) for one to three months have consistently borne losses of 20% to 25% for over two weeks, representing the peak of discomfort in this market cycle.

“Once a large portion of them has capitulated, as we have seen in recent weeks, that is usually when the opportunity to accumulate becomes interesting.” – Darkfost

This group will continue experiencing losses until BTC rises above its realized price, estimated at $113,692.

Bitcoin Onchain Trader Realized Price and Profit/Loss Margin Source: CryptoQuant

Amid the current downturn, major financial institutions maintain a hopeful outlook for Bitcoin’s performance in 2026. Recently, asset management leader Grayscale suggested that the current downturn signals a potential local bottom preceding a recovery, which could challenge existing four-year cycle theories.

Bitcoin ETFs Only Contributed to Minor Selling Pressure

Despite mounting apprehensions about significant sell-offs by ETF holders, analysis reveals that these funds contributed merely a fraction of the selling pressure affecting Bitcoin’s decline.

“I just read that Citi analysts say that for every $1 billion pulled from Bitcoin ETFs it equals roughly a 3.4% drop in Bitcoin’s price.” – Eric Balchunas, Bloomberg ETF Analyst

“ETFs have been like 3% of the total selling tops.”

Bitcoin ETF Flow Source: Eric Balchunas

As of this Tuesday, Bitcoin ETFs recorded a $58 million influx, marking the fifth consecutive day of positive inflows after overcoming a previous $3.48 billion of cumulative outflows noted in November, which stands as their second-worst month on record.

As the average holder begins seeing profitability with Bitcoin trading above $89,600, modest inflows may persist. In contrast, spot Ether (ETH) ETFs experienced $9.9 million in outflows, while Solana (SOL) ETFs recorded $13.5 million in negative outflows.

Bitcoin ETF Flow USD Source: Farside Investors