Bitcoin (BTC) sellers resumed their activities on Thursday as the price of BTC fell below $69,000, the lowest value since Nov. 6, 2024.
Analysts stated that Bitcoin showed signs of 'total capitulation' and the formation of a potential bottom, due to extreme market fear, panic selling by short-term holders, and the relative strength index (RSI).
Main conclusions:
Short-term Bitcoin holders sold nearly 60,000 BTC in 24 hours.
The Crypto Fear and Greed Index shows 'extreme fear', signaling a potential bottom.
The Bitcoin RSI, considered 'most oversold', points to seller exhaustion.
Daily BTC/USD chart. Source: Cointelegraph/TradingView
The capitulation of short-term holders deepens
Nearly 60,000 BTC, worth about $4.2 billion at current rates, held by short-term holders (STHs), or investors who have held the asset for less than 155 days, were moved to exchanges at a loss in the last 24 hours, according to data from CryptoQuant.
This was the largest exchange inflow of the year so far, which is contributing to selling pressure.
"The correction is so severe that no BTC in profit is being moved by LTHs," said CryptoQuant analyst Darkfost in a post on X, adding:
"This is a complete capitulation."
Short-term holder losses of BTC to exchanges in 24 hours. Source: CryptoQuant
By analyzing the volume of coins spent at a loss, Glassnode found that the 7-day SMA of realized losses rose above $1.26 billion per day.
This reflects a "sharp increase in fear," said Glassnode, adding:
"Historically, spikes in realized losses often coincide with moments of acute seller exhaustion, where marginal selling pressure begins to wane."
Bitcoin: unrealized loss. Source: Glassnode
The Bitcoin capitulation metric also "printed its second highest peak in two years," occurrences that previously coincided with accelerated de-risking and high volatility as market participants redefined their positions," said Glassnode.
Capitulation Metric & Current Price. Source: Glassnode
"Extreme fear" may signal the market bottom
The Crypto Fear and Greed Index, which measures overall crypto market sentiment, recorded an "extreme fear" score of 12 on Thursday.
These levels were last seen on July 22, a few months before the BTC price hit the bottom at $15,500 and then began a bull run.
Crypto fear and greed index. Source: Alternative.me
The data reveals that in all capitulation events where the index reached this extreme level, short-term weakness was common, but almost all events produced a recovery.
"We are at an 'extreme fear' level with a Crypto Fear and Greed Index of 11," said analyst Davie Satoshi in a post on X on Thursday, adding:
"History has shown that this is the time to buy and accumulate more!"
The crypto sentiment platform Santiment said in a post on X on Thursday that investor sentiment has "become extremely pessimistic regarding Bitcoin."
"This continues to be a strong argument for a short-term relief, as long as the crowd of small traders continues to show disbelief in cryptocurrency as a whole."
Bitcoin: positive/negative sentiment ratio. Source: Santiment
Bitcoin "most oversold" signals exhaustion of sellers
The CoinGlass heat map shows that BTC's RSI is exhibiting oversold conditions in five out of six timeframes.
Bitcoin's RSI is now at 18 on the 12-hour chart, 20 on the daily chart, and 23 on the four-hour chart. Other intervals also show oversold or nearly oversold RSI values, such as 30 and 31 in the weekly and hourly timeframes, respectively.
Crypto market RSI heat map. Source: Coinglass
Indeed, data from TradingView shows that the weekly RSI is at 29 on Thursday, the "most oversold" since the bear market of 2022, according to analysts.
"Bitcoin is now the MOST oversold since the FTX collapse," said CryptoXLARGE in a post on X on Wednesday, adding that it reflects panic selling among investors.
"Historically, this is where fear peaks and opportunity begins," the analyst added.
Source: X/CryptoXLARGE
Bitcoin's RSI is at the same oversold levels last seen around $16K in 2022, which marked the phase of the "last major capitulation," said analyst HodlFM in a recent post on X, adding:
"It's not a timing signal by itself, but historically, this is where the risk/reward favors buyers."
