Bitcoin has once again entered a phase where some investors are losing faith in a quick recovery and selling at a loss. On-chain data shows a similar type of pressure that has historically appeared near significant market bottoms. However, this doesn’t yet mean an immediate reversal — rather the beginning of a period in which a bottom may gradually form.
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On-chain data shows growing pressure on investors
One of the main signals is a sharp decline in the ratio between UTXOs spent at a profit versus at a loss. This indicator has reached the lowest level of the current cycle, suggesting that bitcoins being sold at a loss are significantly increasing on the market. Such behavior is typically characteristic of capitulation phases, when weaker hands exit the market under the pressure of continued correction.
The pressure is also confirmed by other metrics, such as SOPR or BTC inflows to exchanges from short-term holders. When investors move bitcoins to exchanges and simultaneously realize them at a loss, it often indicates a higher willingness to sell even under unfavorable conditions. Such an environment may increase nervousness in the short term, but it’s also typically part of a process in which the market cleanses itself of excessive speculation.
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The bottom doesn’t form in one move, but gradually
History shows that similar capitulation signals have appeared in the past near important price bottoms. Most recently, this occurred during the previous bear period when bitcoin was trading around $26,000. For long-term investors, these levels may therefore be interesting as they indicate extreme pessimism in the market.
At the same time, capitulation itself is not a guarantee of immediate growth. Analytics firm Swissblock points out that bitcoin bottoms often form in multiple phases – first comes a sharp drop, then a period of stabilization, and only then an attempt at recovery. The current market may thus be close to an important shift in sentiment, but the coming weeks may remain volatile, especially if nervousness is supported by geopolitical tensions or further sell-offs by short-term holders.
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