Is Bitcoin Approaching a Low Point? Initial Signs Indicate It Might Be
Analysis from Bitfinex suggests BTC may be nearing its lowest value in the current market cycle as selling pressure eases.
The recent market downturn has left many Bitcoin investors and market enthusiasts puzzled. Predictions indicate a potential further decline; however, others assert that the leading cryptocurrency is settled in a sturdy support zone.
Notably, BTC experienced a significant recovery last week, surging approximately 15% to exceed $93,000. This rally, however, proved to be temporary, as it plummeted to $84,000 on Monday due to intensified selling, giving the new week a challenging start.
Deleveraging and Capitulation
Considering reasons such as capitulation, deleveraging, and seller fatigue, the latest Bitfinex Alpha update suggests that Bitcoin is approaching its bottom price, which could set the stage for a future rally.
A key factor indicating this low point is extreme deleveraging. Many speculators and leveraged traders have been forced out of the market after the crash on October 10, which saw liquidations exceeding $19 billion.
Following this purge of risky traders, the crypto market is expected to stabilize and grow healthier for investors and long-term holders. This aligns with a recent forecast from Tom Lee of Fundstrat, who noted that a return to new highs could occur following this market adjustment.
In addition to severe deleveraging, the capitulation of short-term holders suggests Bitcoin’s near bottom. Many retail traders and new investors, spooked by the market dip, sold off their positions in panic.
As a result, recorded losses have reached over $400 million, surpassing losses noted during other major market lows. This wave of losses points to an end of capitulation, meaning that once the selling pressure fades, Bitcoin’s price will stabilize.
Additional Considerations
An examination of Bitcoin’s price action reveals signs of seller fatigue, characterized by numerous small candlesticks. This indicates that panic and fear are winding down, causing selling pressure to lessen and leading to the conclusion that Bitcoin may be nearing a bottom.
At the same time, certain institutional investors have not allowed the downtrend to tarnish their optimistic outlook. This is apparent in the notable four-day inflow streak recorded in U.S.-listed Bitcoin ETFs.
