Blockchain analyst Julio Moreno, Head of Research at CryptoQuant, says on-chain signals point to a precarious setup for Bitcoin that traces back to February. According to CryptoQuant’s data, unrealized profits among short-term traders have climbed quickly and now sit at levels that historically precede significant short-term pullbacks.
That picture contrasts sharply with February, when short-term holders were in deep unrealized loss, almost 27% — the heaviest capitulation seen since 2022. That extreme undervaluation helped set the stage for the subsequent strong rally. But the same rally has pushed paper gains back into high, potentially unstable territory. When unrealized profits concentrate heavily in short-term hands, the market has often cooled soon afterward as traders lock in gains.
Adding to the risk is the volatile positioning of short-term whale wallets. CryptoQuant finds Bitcoin is testing the aggregate cost basis of this cohort for the third time since October. These short-term whales, whose realized price sits roughly between $79,000 and $80,000, tend to be more emotion-driven and momentum-sensitive than long-term holders. The prior two tests, in late October 2025 and January 2026, ended with aggressive capitulation as optimism faded and these holders rushed to distribute into weakness.
This third test therefore represents a structural inflection point: maintaining price above that cost-basis zone would reduce immediate sell-side pressure, while slipping below it could prompt another rapid wave of realized losses and forced selling.
Market action reflects the tension. At the time of reporting, Bitcoin was down about 2.6% over 24 hours, trading near $79,460, broadly in line with a roughly 2.6% decline across major digital assets. The pullback has been amplified by a sudden reversal in institutional flows — U.S. spot Bitcoin ETFs recorded their largest single-day net outflows since January, revealing fragility under the current price floor.
Near-term technical stakes are clear. If Bitcoin holds the $77,000–$78,000 support band, the market could consolidate and regain footing. If price breaks decisively below that range, downside toward roughly $76,400 becomes likely, especially if ETF outflows continue and short-term whales begin realizing losses en masse.
In short, CryptoQuant’s read is that the market is overextended among short-term participants and facing a delicate test at a cost-basis that has historically triggered outsized moves. Traders and investors should watch the $79k–$80k cost zone and the $77k support band closely over the coming days for signs of whether the market will absorb selling or give way to a sharper correction.