Bitcoin ($BTC) has recently experienced a price correction, but according to new analysis, many traders still have a profit margin of 3.36%. This data, shared by @ali_charts, indicates that despite the short-term pullback, the overall market trend remains positive for traders who entered positions during earlier bullish phases. However, the current profit margin also suggests the possibility of further downside before a true market bottom is reached.
The chart from CryptoQuant illustrates Bitcoin’s on-chain realized price and profit/loss margins over the past few years, showing how traders have performed relative to the current market price. The chart displays the realized price, which is essentially the price at which Bitcoin was last moved on-chain, and the profit/loss margin, a significant indicator of market sentiment. As of February 2025, Bitcoin’s realized price is $96,471, resulting in a 3.36% profit margin for traders who have held Bitcoin since its last major move.
While the profit margin is currently in positive territory, the chart also demonstrates substantial fluctuations in the profit/loss margin throughout 2023 and 2024. The profit margin often surged during periods of rapid price increases, such as the summer rally of 2023. However, as Bitcoin undergoes price corrections, the margin decreases, indicating shifts in trader sentiment and the possibility of new entry points for investors.
In the past, local market bottoms in Bitcoin have typically formed when the profit/loss margin drops below -12%. This observation is crucial for understanding the current market cycle, as the recent correction has not yet seen such a significant drop in the profit margin. Although Bitcoin’s price has fluctuated below $100,000 recently, it has not reached the thresholds that would indicate a definitive bottom.
Historically, the largest dips in Bitcoin’s price have coincided with negative profit margins, with traders holding positions that are significantly underwater. When these negative margins reach extreme levels, such as -12% or lower, local bottoms often form, followed by periods of recovery.
Based on this historical pattern, the fact that the current profit margin remains positive suggests that there may be further downside before a true market bottom is established. This implies that Bitcoin’s recent correction may not yet represent the lowest point of the current market cycle. Traders and investors may need to prepare for additional volatility before the market stabilizes and finds a strong foundation for a new rally.
Although traders are currently profitable, the price could continue to correct before the market truly stabilizes. Traders should closely monitor the profit margin along with price action to gauge when a true bottom might form. If the profit margin returns to negative territory, it 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 may occur before the market finds a solid floor. While the current price action indicates a period of relative stability, traders should be cautious 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.