Ark Invest Says Bitcoin Selloff Nears Exhaustion, Warns of ETF Outflow Risk

Ark Invest said Bitcoin's capitulation phase moved into its final stretch in the second quarter.

In its second-quarter 2026 report, The Bitcoin Quarterly, released on July 17, the US asset manager wrote that "seller exhaustion" is emerging even as Bitcoin digital asset treasury, or DAT, companies face mounting stress.

Bitcoin fell about 14% in the second quarter alone, according to the report. Its quarter-end close of $58,544 stood below every major price gauge, including the short-term holder realized price of $70,327, the 200-day moving average of $75,371 and the on-chain average price of $76,660. Ark said the pattern has repeatedly appeared in past bear markets.

On-chain data also showed some signs of a bottom forming. The share of Bitcoin supply sitting at a loss rose to about 54%, surpassing supply in profit, at about 46%, for the first time in this cycle.

Realized losses also briefly exceeded realized gains in the second quarter, driving the profit-to-loss ratio down to about 0.82. Ark interpreted that not as a signal of further downside, but as a washout indicating investors were in the final stage of capitulation.

Accumulation by long-term holders continued. Investors who had held Bitcoin for at least 155 days owned a record 14.85 million tokens as of the second quarter, up about 313,000 from the end of the first quarter. Long-term holders absorbed coins sold by short-term investors during the decline, the report said.

Institutional demand weakened. US spot Bitcoin exchange-traded funds recorded net outflows for seven straight weeks in the second quarter, with total quarterly outflows reaching about 71,000 Bitcoin. Ark said the withdrawals are weakening a key source of demand that had supported Bitcoin prices.

Funding conditions for Bitcoin DAT companies also worsened. Strategy, the world's largest corporate Bitcoin holder, was a prime example. According to the report, its perpetual preferred stock Stride fell to around $74 in the second quarter before trading near $84 at quarter-end.

Ark said preferred shares trading well below par reflect rising funding costs for Bitcoin DAT companies and could curb the ability of leveraged DAT firms to continue buying Bitcoin.