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Bitcoin may be on the verge of a sharp market correction as on-chain data reveals a dangerous structural shift reminiscent of previous cyclical peaks.
According to Julio Moreno, Head of Research at blockchain analytics firm CryptoQuant, the rapid accumulation of unrealized profits among short-term traders is signaling an overextended market vulnerable to a near-term pullback.
The current setup stands 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 back into dangerously elevated territory. Historically, such high concentrations of paper gains serve as a reliable leading indicator that a market cooling-off period is imminent in the coming weeks.
Compounding this risk is the instability in the positioning of short-term whale wallets. 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 has a realized price between $79,000 and $80,000, has historically shown far greater emotional reactivity and momentum-driven panic than long-term market participants.
 
The two previous 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 into weakness.
This third test represents a critical structural regime decision: sustaining a price above this zone could alleviate sell-side 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% over the past 24 hours to trade at $79,460.12, in line with a 2.57% decline across the broader digital asset market.
This downward pressure is driven primarily by an abrupt reversal in institutional sentiment, with U.S. spot Bitcoin ETFs recording their largest single-day net capital outflows since January, exposing the fragility of the current price floor.
If BTC holds above the $77,000–$78,000 support, it could consolidate, while a break below could trigger a deeper correction toward $76,400, especially if ETF outflows persist.