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A Heartwarming Signal Came in Bitcoin: 49 Thousand Dollars Seems to Be the Bottom! - Coin Bulletin
Many on-chain metrics have signaled capitulation and selling exhaustion in Bitcoin (BTC).
The sharp decline in the cryptocurrency market on Tuesday is seen by many analysts as potentially indicating a local bottom in Bitcoin's (BTC) price. On-chain metrics and market data particularly indicate that short-term investors panicked and sold at significant losses.
Short-term investors panicked
While the total crypto market capitalization remained at $2.7 trillion, there has been a decrease of approximately $1 trillion since the peak in December 2024. Bitwise Europe Research Director Andre Dragosch noted that the Crypto Asset Sensitivity Index has dropped to its lowest level since August 2024, which is similar to the period when Bitcoin hit a low of $49,000.
Dragosch, "The Crypto Asset Sensitivity Index gave a strong counter buying signal for Bitcoin. Fund flows, on-chain data, and the widespread downward trend in derivative markets indicate that the downside risks are quite limited. At current price levels, the risk-return outlook is quite attractive," he said.
On-chain data gave a bottom signal
Investors lost $1.8 billion on Tuesday, the biggest daily loss since the Japanese yen carry trade unwinding in August 2024, according to data from Glassnode. Short-term investors sent 43,600 BTC to exchanges at a loss of ($3.9 billion).
These metrics are crucial in identifying market bottoms and indicate that Bitcoin is approaching a significant turning point. Analysts noted that the withdrawal of short-term investors with losses could signal the market's recovery process.