Stretched Profits, Cooling Demand Put Bitcoin Rally on Pause—for Now: Report

Bitcoin Rally Faces Rising Profit-Taking Risk

Bitcoin’s recent surge prompted CryptoQuant to declare that the cryptocurrency had entered a bull market. The firm pointed to Bitcoin’s move above its 365-day moving average, which it described as the “definitive technical signal” that has marked the beginning of previous Bitcoin bull markets.

However, CryptoQuant also warned that the rally may be losing momentum. Short-term holders—investors who have owned Bitcoin for one to three months—are sitting on an average unrealized profit of approximately 33%. That is the highest level since December 2024, and historically, gains of this size have encouraged investors to sell and lock in profits.

Bitcoin holders realized 25.7K BTC in profit last week, according to the report. It was the largest single-day profit realization of 2026 and occurred one day after Bitcoin’s price reached an eight-month high. Although CryptoQuant said Bitcoin still had room to rise, it added that the probability of a near-term correction was increasing.

Bitcoin Support Levels to Watch

CryptoQuant did not forecast how far Bitcoin could fall if the rally reverses. It did, however, identify three levels that could provide support during a pullback: the 365-day moving average near $80,000, the 200-day moving average near $71,000, and traders’ on-chain realized price near $67,000.

According to the firm, Bitcoin’s broader bullish structure would remain intact as long as these levels hold. Under that scenario, a decline would represent a healthy consolidation within a young bull market rather than a reversal of the overall trend.

Bitcoin’s Recent Market Volatility

Bitcoin reached a record high of $126,080 in October last year before beginning to decline later that month. The downturn followed the largest liquidation event in cryptocurrency history, during which more than $19 billion in leveraged bets were closed.

Bitcoin continued to fall during the first half of this year as the Federal Reserve signaled that it was in no hurry to reduce interest rates. At the same time, investors increasingly directed capital toward artificial intelligence-related stocks in search of returns, adding pressure to risk-sensitive assets such as Bitcoin.

Market conditions have since shifted, with the so-called “debasement trade” gaining renewed attention. The strategy involves investing in assets viewed as a hedge against the declining value of a currency. Total U.S. debt surpassed $40 trillion for the first time in July, while Bitcoin and precious metals such as gold have historically performed well during periods of dollar weakness.

Why This Matters

CryptoQuant’s analysis highlights the tension between Bitcoin’s improving long-term technical structure and the immediate risk of heavy profit-taking. A move above the 365-day moving average has historically been significant for Bitcoin’s market cycle, but elevated unrealized gains can create selling pressure before the next sustained advance.

The $80,000, $71,000 and $67,000 levels could therefore become important benchmarks for determining whether any pullback remains a routine consolidation or develops into a broader trend reversal. The next phase of Bitcoin’s rally will depend on whether demand can absorb profit-taking from short-term holders while the cryptocurrency remains above those support areas.

Frequently Asked Questions

Why did CryptoQuant say Bitcoin entered a bull market?

CryptoQuant cited Bitcoin’s move above its 365-day moving average, which the firm called the “definitive technical signal” associated with the start of previous Bitcoin bull markets.

Why could Bitcoin face a correction?

Short-term Bitcoin holders are holding average unrealized gains of about 33%, the highest level since December 2024. Such large gains have historically increased the incentive to sell, and holders realized 25.7K BTC in profit in a single day last week.

Which Bitcoin price levels could provide support?

CryptoQuant identified potential support near $80,000 at the 365-day moving average, around $71,000 at the 200-day moving average, and approximately $67,000 at traders’ on-chain realized price.