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Unprecedented statistics from Bitcoin’s decline on Thursday indicate a potential market bottom is approaching.
Extreme capitulation indicators are now at levels that coincide with significant cycle lows.
Several indicators suggest that the bitcoin price is nearing a low point. (sergeitokmakov/Pixabay, modified by CoinDesk)
Key points:
- Almost 10 million BTC are presently at a loss, marking the fourth-highest figure in history.
- Bitcoin has reached extreme oversold conditions, with an RSI at its third-lowest level, in conjunction with a Fear and Greed Index reading below 10 and the largest daily drawdown since the FTX collapse in 2022.
- Bitcoin saw a rebound on Friday, rising to $68,000 from a low of $60,000 on Thursday.
Bitcoin’s collapse on Feb. 5 is poised to be remembered as one of the most significant selloffs on record. Below are essential statistics that illustrate the event and suggest how much further it may decline.
The bitcoin price commenced the day near $73,000 before dropping to a low around $62,000, a decline—or, as some traders refer to it, a candle—exceeding $10,000. The day’s 14% drop was the largest single-day decline since November 2022, during the fall of crypto exchange FTX.
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The Fear and Greed Index has fallen into single digits, a threshold observed only a few times in bitcoin’s 17-year history. Concurrently, bitcoin has been the third most oversold it has ever been on the RSI, measuring the pace and variation of price movements.
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Profit and Loss Supply
The circulating supply in loss, indicating the number of coins that last transacted at prices above the current market price, surged to nearly 10 million BTC. This figure ranks as the fourth-highest ever, comparable to the bear-market lows of 2015, 2019, and 2022.
Total Supply in Loss (Glassnode)
Another indicator, the circulating supply held by long-term investors that is currently at a loss, reached 4.6 million BTC. During the lows of earlier bear markets, this figure surpassed 5 million BTC, suggesting that this metric is nearing, but has not yet completely reached, previous extremes.
Total Supply in Loss by LTHs (Glassnode)
The amounts of supply in profit and in loss are nearly equal, a scenario that has historically been associated with the conclusion of significant market downturns. Currently, approximately 10 million BTC are in profit while another 10 million BTC are in loss.
While it is uncertain whether the bottom for bitcoin has been reached, historical data implies it is likely imminent, especially with bitcoin already recovering towards $68,000.
However, market participants may be anticipating that bitcoin will test its 200-week moving average, which is currently around $58,011.
