Bitcoin Price Hints Local Bottom as STH Losses Hit Capitulation Levels

• Bitcoin price poised for 6% surge amid a wide-market relief rally.
• BTC’s short-term investors have recorded massive unrealized losses amid the recent market downturn, signalling a risk of capitulation.
• Since October, an ascending support trendline has been bolstering the coin price as the defence line of the long-term uptrend

The crypto market witnessed a slight slowdown in its prevailing correction trend as Bitcoin showed resilience above the $90,000 mark. In the daily chart, the coin price shows a long-tail rejecting candle at this support, signaling a potential relief rally ahead. However, a number of factors, including the ETF outflow, long-term holders selling, and short-term holders at capitulation, are contributing to overall bearish momentum in the market, which could renew bearish momentum.

Bitcoin Price Enters Capitulation Window With STH Losses

Bitcoin has lost 17% over the last week, from its high above $107,600 to about $89,200 as of November 19.

The drop coincides with a marked change in institutional flows. Spot Bitcoin ETFs that were soaking up the supply for months drew outflows on most trading days last week, sending coins back into the open market. Corporate treasury programs that once announced huge purchases have gone quiet; several have gone quiet instead of adding to exposure.

A single 8K corporate acquisition made headlines but pales in comparison to past purchases from the same companies, which were frequently for 20K+ BTC per transaction.

On-chain metrics show heavier selling from old holders: Wallets dormant for at least five months transferred or spent more than 800,000 BTC during the past 30 days—the quickest rate of long-term holder distribution this cycle.

Short-term investors who purchased near the recent highs now sit on massive unrealized losses. The percentage of the holding period of coins less than 155 days underwater has hit levels previously registered at the bear market bottom of 2018, the 2020 crash of the pandemic, the bottom of 2022’s capitulation, and the bottom of the regional bank crisis earlier this year.

So far, however, those short-term holders have not triggered a volume spike in actual realized losses. Daily selling pressure from this cohort is still moderate in comparison to previous panic events.

Historically, this very particular combination—heavy supply from long-term holders hitting the market as short-term holders suffer extreme paper losses but do not widely liquidate—has been the point of exhaustion of corrections and the onset of multi-month basing periods. The same thing is available today.

Bitcoin Price To Shift Sideways above $89,000 

With an intraday gain of 1%, the Bitcoin price rebounded to the $93,123 mark. The upswing came as a relief rally after a sharp sell-off since last week. The temporary upswing could gain 6.3% before facing a key resistance of the downsloping trendline at $97,500. 

The dynamic could bolster the sell-the-bounce sentiment in BTC price as the renewed bearish momentum is expected to drive a prolonged correction. If the sellers continued to defend this resistance, the coin price could return to $89,000 to retest a multi-year support trendline.

Since October 2023, the ascending trendline has acted as a major accumulation zone for buyers, which pushed the mid-term uptrend in price.

Therefore, if the Bitcoin price is projected to resonate within this converging trendline to drive a short-term consolidation. The potential sideways action could allow the market momentum to stabilize before deciding the price lead.

An upswing breakout from the overhead trendline will bolster buyers’ strength for renewed recovery, while a breakdown below the bottom trendline will drive an extended correction.

Also Read: Hashed CEO Sees Crypto Bear Phase as a Temporary Setback