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Bitcoin may be on the brink of a sharp market correction as on-chain data reveals a dangerous structural shift reminiscent of previous cyclical peaks.
According Julio MorenoHead of research at blockchain analytics firm CryptoQuant, the rapid accumulation of unrealized profits among short-term traders is indicating an overextended market vulnerable to a short-term pullback.
The current setup is in contrast to February, when traders endured extreme unrealized losses of nearly 27%, the deepest level of capitulation recorded since 2022. That severe undervaluation ultimately laid the groundwork for the recent massive price rally.
However, that momentum has now pushed unrealized profit margins into dangerously high territory. Historically, such high concentrations of paper earnings serve as a reliable leading indicator that a period of market cooling is imminent in the coming weeks.
Adding to this risk is the instability in the positioning of whale portfolios in the short term. CryptoQuant data also reveals that Bitcoin is currently testing the aggregate cost basis of these short-term holders for the third time since October. This specific cohort, which is priced between $79,000 and $80,000, has historically displayed much greater emotional reactivity and momentum-driven panic than long-term market participants.
The previous two times Bitcoin tested this specific threshold, the market experienced aggressive capitulation. In late October 2025 and January 2026, optimism briefly returned as unrealized losses compressed, but fading momentum forced these whales to rapidly distribute their holdings until they were weakened.
This third test represents a critical structural decision of the regime: holding a price above this zone could relieve selling pressure, while falling below it could trigger another rapid wave of realized losses.
The immediate market reaction reflects this underlying tension. At press time, Bitcoin fell 2.61% in the last 24 hours to trade at $79,460.12, in line with a 2.57% drop across the entire digital asset market.
This downward pressure is primarily due to an abrupt reversal in institutional sentiment: US Bitcoin spot ETFs recorded their largest single-day net capital outflows since January, exposing the fragility of the current price floor.
If BTC holds above the $77,000 to $78,000 support, it could consolidate, while a break below could trigger a deeper correction towards $76,400, especially if ETF outflows persist.
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