What Needs to Happen for Bitcoin to Mark a Local Bottom? CryptoQuant Reports

Analysts at market intelligence platform CryptoQuant have revealed that BTC’s price bottoming signal can not be triggered until unrealized profit margins for short-term holders reach -10%.

According to the CryptoQuant Institutional Insights weekly crypto report, short-term holders’ profit margins have approached zero, and this has caused ease in selling pressure. However, the leading digital asset is yet to call a price bottom.

BTC Falls Below $40K

Earlier this week, BTC fell below $40,000 for the first time since December 3, 2023, triggering roughly $230 million in short and long liquidations. The asset recorded its lowest price since the United States Securities and Exchange Commission (SEC) approved numerous spot Bitcoin exchange-traded funds (ETFs) for listing on securities exchanges.

Before BTC dumped under $40,000, the cryptocurrency had lost a significant portion of its post-ETF approval gains, plunging from roughly $49,000 to the $43,000 level, leaving the crypto community in anticipation of a price bottom as there will not be any rally until one takes place. The decline has also taken a toll on miners suffering an 87% decrease in fees.

As of last week, short-term holders’ unrealized profit margins hovered around 16%, and two days ago, CryptoPotato reported that the figure may need to go below 0% before we can call a bottom and expect a rally. Although BTC had recovered a little by press time, CryptoQuant’s analysts have set the margin at -10% as price support based on short-term holders’ realized price, which is currently between $39,000 and $37,000.

New ETFs Amass Over 100K BTC

While BTC has been on a downward spiral, the holdings of spot Bitcoin ETFs in the U.S. have continued to rise. At the time of writing, the products held approximately 641,000 BTC, representing significant growth since they launched on January 11.

Grayscale’s GBTC holds the highest, 536,000 BTC; the other nine funds have collectively amassed around 104,000 BTC. BlackRock’s IBIT and Fidelity’s FBTC are leading the new ETFs, with holdings sitting at 44,000 and 34,000, respectively.

It is worth noting that GBTC held roughly 619,000 BTC before the product’s conversion into a spot ETF was approved; however, constant outflows have diminished the stash.