Bitcoin fell 22 percent in the first quarter of this year, but holdings by long-term accumulation-minded investors surged 69 percent.

On April 24, blockchain media outlet CoinPost reported that Ark Investment Management said in its quarterly report, "The Bitcoin Quarterly," that on-chain indicators showed strength despite price weakness.

Bitcoin ended the first quarter at about $68,200 as of March 31. During that period, it fell below all three key support levels: the 200-day moving average of $90,613, the short-term holder cost basis of $82,767 and the on-chain average of $78,039. Ark said this meant it had technically entered a bearish zone.

Ark said it did not see a historical bottom signal. It said the realised price was about $54,177 and the investor price was about $50,000, and it had not yet reached a zone that would suggest bottom formation.

Holdings in U.S. spot bitcoin exchange-traded funds totalled about 1.29 million BTC, little changed. There was no clear evidence of capitulation during the 22 percent decline, and institutional investors maintained their holding stance. Holdings by long-term accumulation-minded "conviction buyers" rose during the first quarter from about 2.13 million BTC to about 3.60 million BTC. Ark said long-term investors who saw the price drop as a buying opportunity absorbed supply.

The report also flagged quantum computing risk as a key issue. Research by Google and Caltech's OratQ showed the number of physical qubits needed to break Bitcoin's elliptic curve cryptography could drop to under 500,000, about one-twentieth of previous estimates. Ark estimated about 33 percent of Bitcoin's total supply could be exposed to long-term risk and stressed the need to speed up a shift to post-quantum cryptography.

The report also mentioned macro indicators. The U.S. Bureau of Labor Statistics revised down nonfarm payroll employment by 861,000, and the core inflation rate of private inflation gauge Truflation fell to 1.11 percent year on year, down to levels not seen since before the COVID-19 pandemic. Ark said this could widen room for the U.S. Federal Reserve to cut rates and could be supportive for risk assets including bitcoin.