Bitcoin may near cyclical low near $50,000 as weak hands exit, ARK says

Bitcoin fell 4% to $58,544 in Q2, closing below key averages, but ARK sees evidence the decline may mark a cyclical bottom as weak hands exit.

"Supply in loss has surpassed supply in profit, long-term holders accumulated to an all-time high, and realized-loss velocity briefly exceeded profit-taking — a combination that has historically clustered around capitulation phases," the firm said in its latest The Bitcoin Quarterly report.

Long-term holders accumulated 14.85 million BTC, a record, while realized volatility remained subdued despite the price decline, reflecting a more orderly market. ARK noted Bitcoin has yet to revisit its realized and investor cost bases, implying potential downside toward $49,000 to $53,000. Bitcoin traded at $62,806 as of press time, down about 2% in the last 24 hours after pulling back from a weekly high of $65,000. The decline came as markets turned cautious over escalating geopolitical risks and uncertainty over the CLARITY Act's path through Congress.

The macro environment remains supportive, with rising US productivity and accelerating business investment, ARK said. The next key test for Bitcoin will be whether it can hold above the $49,000 to $53,000 zone, a level that has historically marked the floor during prior cycle bottoms.

Institutional pressure builds as ETF outflows and STRC weakness mount

While on-chain signals point to a potential bottom, the institutional market tells a different story. US spot Bitcoin ETFs recorded their first seven-week streak of net outflows, with investors withdrawing approximately 71,000 BTC over the quarter and removing a key source of market support.

Strategy's STRC preferred stock fell sharply from its $100 face value to a late-June low of about $74.60 before closing the quarter near $85. ARK said the persistent discount to par suggests financing conditions are worsening for Bitcoin treasury companies, increasing their cost of capital and potentially limiting future Bitcoin purchases.

Despite those headwinds, the three-month futures basis stayed slightly positive at around 2.3%, indicating muted bullish positioning without slipping into backwardation, ARK added. Derivatives markets showed few signs of panic even as ETF investors pulled capital.

Macro backdrop supports long-term growth

On the macro front, ARK noted that the US economy continues to favor long-term growth, supported by rising productivity and accelerating business investment despite lingering inflation pressures. The recent flattening of the Treasury yield curve should be viewed as evidence of technology-driven deflationary pressures rather than a recession warning, the firm said.

Record orders for core capital goods point to a strengthening investment cycle fueled by AI, energy infrastructure, deregulation and tax policy, which ARK expects to extend beyond previous technology booms. The combination of supportive macro conditions and on-chain capitulation signals creates a setup that has historically preceded sustained recoveries, according to the report.

This article is for informational purposes only and does not constitute investment advice.