Bitcoin (CRYPTO: BTC) fell 22% in Q1, according to ARK Invest's latest Bitcoin Quarterly report, yet long-term buyers are stepping in hard.

Long-Term Holders Continue Accumulating

ARK's read is not "Bitcoin is dead." It's more nuanced: the price action looks bearish, but the internal market structure is showing signs of late-stage stress, not systemic collapse.

The firm's key takeaway: Bitcoin has not yet hit the deeper capitulation levels that usually mark a confirmed global bottom.

ARK said "conviction buyers" increased holdings by 69% during the Q1 drawdown, rising from roughly 2.13 million BTC to 3.60 million BTC.

ARK said the buying accelerated around Bitcoin's February trough, suggesting strong-handed investors viewed the correction as an opportunity rather than a reason to exit.

Spot Bitcoin ETF balances also held firm.

According to the report, U.S. spot Bitcoin ETF balances stayed between roughly 1.26 million BTC and 1.31 million BTC through the quarter, closing March near 1.29 million BTC.

That stability came despite Bitcoin's 22% drawdown.

Why The Bottom Is Not Yet In

And yet, the report makes the case that Bitcoin has not hit its “real” bottom zone yet.

The key downside floor sits between realized price and investor price.

Those levels are between the realized price of about $54,177 and the investor price of about $49,759.

The derivatives market has also cooled sharply.

Perpetual funding rates fell from 7.1% at the start of Q1 to 1.8% by quarter-end, showing that leveraged long positioning got flushed.

The rolling three-month futures basis also compressed, pointing to weaker speculative appetite.

Still, ARK noted that true cyclical bottoms often see futures basis flip into backwardation. That has not happened yet.

Macro Could Be Turning Into A Tailwind

ARK's macro section leans more constructive.

The firm pointed to a massive 861,000-job downward revision to U.S. nonfarm payrolls, the largest negative revision since the Global Financial Crisis.

That level of labor market softening could give the Federal Reserve more room to cut rates.

ARK also cited Truflation's real-time core inflation reading of 1.11% year-over-year, its lowest level since before the pandemic.

ARK concludes that Bitcoin in a bearish technical setup, but not a broken fundamental one.

The firm is watching the $54,000 to $50,000 zone as the deeper capitulation area that would historically strengthen the case for a durable bottom.

Image: Shutterstock