The cryptocurrency market faced a significant downturn on Tuesday, but many on-chain metrics suggest it could have marked a bottom for Bitcoin’s (BTC) price.
The total cryptocurrency market capitalization hovered just above $2.7 trillion, signifying nearly a $1 trillion decline since its peak in December 2024, according to TradingView data.
Key Insights:
- Short-term holders sold a record amount of Bitcoin to exchanges for a loss of $3.9 billion.
- Realized losses reached $1.8 billion, the highest since the end of the yen carry trade in August 2024.
- The Crypto Asset Sentiment Index showed one of its lowest levels since August 2024, hinting at market capitulation.
Andre Dragosch, Head of Research at Bitwise Europe, pointed out that the Crypto Asset Sentiment Index hit its lowest point, reminiscent of the earlier capitulation around $49,000.
“The Crypto Asset Sentiment Index just flashed a massive contrarian buy signal for Bitcoin. Widespread bearishness suggests limited downside risks. At these prices, the risk-reward outlook appears quite favorable,” Dragosch noted.
Investors faced a staggering loss of $1.8 billion in a single day, the largest since August. Short-term holders, defined by those holding Bitcoin for less than 155 days, sent 43,600 BTC ($3.9 billion) to exchanges at a loss—the highest recorded since August 2024.
These metrics are crucial for identifying potential market bottoms, indicating that Bitcoin may be near a pivotal turning point.
