Bitcoin ($BTC) has recently experienced a price correction, but according to new analysis, many traders are still holding a profit margin of 3.36%. This data, shared by @ali_charts, suggests that despite the short-term pullback, the broader market trend remains positive for traders who entered positions during earlier bullish phases. However, the current profit margin also indicates the possibility of more downside before a true market bottom is reached.
The chart from CryptoQuant visualizes Bitcoin’s on-chain realized price and profit/loss margins over the past couple of years, tracking how traders have fared relative to the current market price. The chart shows the realized price, which is essentially the price at which Bitcoin has last moved on-chain, as well as the profit/loss margin, a key indicator of market sentiment. As of February 2025, Bitcoin’s realized price stands at $96,471, which represents a 3.36% profit margin for traders holding Bitcoin since its last major move.
While the profit margin currently remains positive, the chart also illustrates significant fluctuations in profit/loss margin throughout 2023 and 2024. The profit margin often spiked during periods of rapid price increases, such as the summer rally of 2023. However, as Bitcoin faces price corrections, the margin decreases, signaling shifts in trader sentiment and the likelihood of new entry points for investors.
Historically, Bitcoin traders have seen local market bottoms form when the profit/loss margin drops below -12%. This observation is important for understanding the current market cycle, as the latest correction has yet to see such a significant drop in profit margin. While Bitcoin’s price has fluctuated below $100,000 recently, it has not reached the thresholds that would indicate a definitive bottom.
In the past, the largest dips in Bitcoin’s price have been accompanied by negative profit margins, with traders holding positions that are significantly underwater. When these negative margins hit extreme levels, such as -12% or lower, local bottoms have often formed, followed by periods of recovery.
Considering this historical pattern, the fact that the current profit margin remains positive suggests that there may be further downside ahead before a true market bottom is established. This implies that Bitcoin’s recent correction may not yet mark the lowest point of the current market cycle. Instead, traders and investors may need to prepare for additional volatility before the market stabilizes and finds a solid foundation for a new rally.
While traders are currently in profit, the price could continue to correct before the market truly stabilizes. Traders should closely monitor the profit margin alongside price action to determine when a true bottom might form. A return to negative territory in the profit margin could signal a local bottom, providing potential opportunities for those looking to buy during market dips.
Bitcoin’s recent price correction has left traders with a 3.36% profit margin, but historical trends suggest that further downside could occur before the market finds a solid floor. While the current price action indicates a period of relative stability, traders should exercise caution and watch for the profit margin to approach the -12% mark, which historically signals a local bottom. As always, the cryptocurrency market remains volatile, and both opportunities and risks lie ahead for Bitcoin traders.