CryptoQuant warns Bitcoin correction risk as profits peak since Feb
CryptoQuant’s Head of Research Julio Moreno says on-chain data shows a “dangerous” market structure forming for Bitcoin, echoing risk patterns seen at prior cycle highs. He points to rapid growth in unrealized profits among short-term traders, which historically acts as a leading signal that a cooling-off or correction may arrive within weeks.
Moreno contrasts today’s conditions with February, when traders saw extreme unrealized losses near -27% (the deepest capitulation since 2022). That period later supported the subsequent sharp rally—but the same momentum has now pushed paper gains into “dangerously elevated” territory.
A second warning involves short-term whale wallets. CryptoQuant data suggests Bitcoin is testing the aggregate cost basis of these wallets for the third time since October. This cohort (realized price roughly $79,000–$80,000) has historically been more prone to momentum-driven selling. The first two tests (late Oct 2025 and Jan 2026) were followed by aggressive capitulation after brief optimism and unrealized-loss compression.
Market price action aligns with the risk. At the time of writing, Bitcoin is down 2.61% in 24 hours to about $79,460. The decline is linked to a sharp reversal in institutional sentiment, with U.S. spot Bitcoin ETFs posting their largest single-day net outflows since January.
Key trade levels: if Bitcoin holds the $77,000–$78,000 support zone, it may consolidate. A break below could trigger a deeper correction toward ~$76,400, especially if ETF outflows persist.
Bearish
CryptoQuant’s setup is skewed toward a near-term downside catalyst for Bitcoin: rising unrealized profits among short-term traders typically precedes market cooling, and the third “cost-basis test” by short-term whale wallets historically leads to realized-loss selloffs. The current tape reinforces this: the largest since-January net outflows from U.S. spot Bitcoin ETFs weaken the price floor.
If Bitcoin holds the $77k–$78k support, the effect may remain contained to consolidation. But a breakdown would likely accelerate deleveraging/forced selling, pushing the market toward the cited ~$76.4k area. In similar prior episodes (e.g., when capitulation dynamics reversed into temporary optimism), traders often see volatility spikes around these technical thresholds before the next leg.