Bitcoin may be approaching a cyclical market low as selling pressure shows signs of exhaustion, according to ARK Invest’s latest The Bitcoin Quarterly report.

The leading digital asset fell around 4% to $58,544 by quarter-end, closing below major technical and on-chain averages after an early rally failed to hold above them.

While ARK views that configuration as historically bearish and said Bitcoin has yet to revisit its realized and investor cost bases, implying potential downside toward $49,000-$53,000, the firm also sees evidence that selling pressure is becoming exhausted.

According to the report, supply in loss surpassed supply in profit, long-term holders accumulated to an all-time high of 14.85 million BTC, and realized-loss velocity briefly exceeded profit-taking, a combination ARK said has historically clustered around capitulation phases.

Meanwhile, realized volatility remained subdued despite the price decline, reflecting a more mature and orderly market.

Bitcoin traded at $62,806 at press time, off 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.

ETF outflows and STRC weakness pressured Bitcoin’s institutional market

According to ARK, institutional Bitcoin markets weakened during the second quarter as treasury financing came under pressure and ETF investors pulled capital, though derivatives markets showed few signs of panic.

Strategy’s STRC preferred stock fell sharply from its $100 face value to a late-June low of about $74.6 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.

At the same time, 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.

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.

Productivity and AI investment support long-term US growth

On macro, ARK noted that the US macro environment continues to favor long-term growth, supported by rising productivity and accelerating business investment despite lingering inflation pressures.

The firm also said the recent flattening of the Treasury yield curve should be viewed as evidence of technology-driven deflationary pressures rather than a recession warning.

In addition, record orders for core capital goods point to a strengthening investment cycle fueled by AI, energy infrastructure, deregulation and tax policy, which the firm expects to extend beyond previous technology booms.