Is There a Bull Trap for Bitcoin (BTC)? Analyst Issues Warning

While some analysts expect Bitcoin surpassing the $85,000 level to confirm a new uptrend, crypto analyst Sherlock warned that this region could also generate significant selling pressure.

According to data shared by Sherlock, spot Bitcoin ETFs in the US have been trading below their total break-even cost, which is around $86,000, for a full 228 trading sessions. While ETF investors’ unrealized losses rose to approximately $18 billion in February, it is noted that around $3.9 billion of that loss remains unrecovered despite Bitcoin gaining 23% in just 21 trading sessions.

Drawing attention to on-chain data, Sherlock stated that approximately 1.07 million BTC were purchased between $83,000 and $86,000, and that almost all of these Bitcoins were held by long-term investors. The highest cost intensity was observed at around $85,000.

According to the analyst, the $85,000-$86,000 region is therefore not just an ordinary resistance area drawn in technical analysis. On the contrary, it represents a significant cost zone where real investors, who have been in a losing position for months and are waiting for their investments to reach the break-even level again, are concentrated.

Sherlock noted that Bitcoin was trading approximately 1.5 percent below that region earlier in the month, and that in the following week, spot Bitcoin ETFs experienced net outflows in all four trading sessions. A total net outflow of $462.7 million was recorded from ETFs during this period.

With Bitcoin currently trading around $77,600, US spot ETF investors need the price to rise by approximately 11 percent to reach their total cost level again.

Sherlock stated that a daily close above $86,000 for Bitcoin would indicate that the supply in that region has been absorbed by the market. However, according to the analyst, until this happens, the move, which investors see as a new bullish breakout, could turn into a selling and exit opportunity for institutional investors who have been in a losing position for a long time.

*This is not investment advice.