Despite a recent price correction, Bitcoin ($BTC) traders still maintain a profit margin of 3.36%, according to new analysis. This data, provided by @ali_charts, indicates 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 suggests the possibility of further downside before reaching a true market bottom.
A chart from CryptoQuant illustrates Bitcoin’s on-chain realized price and profit/loss margins over the past few years, tracking traders’ performance relative to the current market price. The chart shows the realized price, which is essentially the price at which Bitcoin was last moved on-chain, and the profit/loss margin, a crucial 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 movement.
While the profit margin currently remains positive, the chart also demonstrates significant fluctuations in the 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 experiences price corrections, the margin decreases, indicating shifts in trader sentiment and the possibility of new entry points for investors.
Historically, local market bottoms in Bitcoin have occurred when the profit/loss margin drops below -12%. This observation is critical for understanding the current market cycle, as the recent correction has not yet seen such a significant decline 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.
In the past, the largest drops in Bitcoin’s price have been accompanied by negative profit margins, with traders holding positions that are significantly in the red. When these negative margins reach extreme levels, such as -12% or lower, local bottoms have often formed, 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. 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 a profitable position, the price may continue to correct before the market truly stabilizes. Traders should closely monitor the profit margin alongside price action to determine when a true bottom may form. A return to negative territory in the profit margin could signal a local bottom, presenting potential opportunities for those seeking to buy during market dips.
Bitcoin’s recent price correction has resulted in a 3.36% profit margin for traders, but historical trends suggest that further downside may occur before the market establishes a solid floor. While the current price action indicates a period of relative stability, traders should remain cautious and watch for the profit margin to approach the -12% mark, which historically signifies a local bottom. As always, the cryptocurrency market remains volatile, and both opportunities and risks lie ahead for Bitcoin traders.