Bitcoin’s (BTC) Monday’s drawdown pushed the stock to a 26.7% loss, narrowly matching the 26.5% slide seen in April, and marked a steep correction of the current bull market. The transition of the red-lined multiple indicators of the market structure, suggesting the current correction may be a final stage of leverage washing.
Key Takeaways:
-
Bitcoin’s 26.7% correction was the biggest of the cycle.
-
The Crypto Fear & Greed index shows ‘intense fear’ among investors, but as a counterindicator, it could be a sign that Bitcoin is trading at a discount.
“Extreme fear” is usually followed by profitable bitcoin price action
Bitcoin researcher Axel Adler Jr. said That local market stress index remained elevated following Monday’s sharp sell-off, currently sitting at 67.82, above the system watch threshold of 64 but still below levels associated with critical breakdowns.
The highest point of tension occurred with the fall of BTC on Monday, when it was realized that volatility had advanced to a 4.55 Z-score and aggressive selling signaled stress alerts.
Over the past 24 hours, the index has eased to the 62-68 range, although the short-term slope (+2.62) is a sign of renewed stress building within the market.
Sentiment indicators paint a similar picture. The Crypto Fear & Greed index fell below 10 before rebounding to 15, but is still locked in deep fear. Historically, sinking in this zone has been more constructive in recent years.
Throughout previous cycles, whenever the Crypto Fear & Greed Index fell down At 10 or below, Bitcoin continues to deliver strong returns. Typically, prices increased by 10% within a week, maintained similar strength over 15-30 days, and accelerated to 23% on day 80 and 33% by six months.
Economist Alex Kruger mentioned That in all 11 capitulation events since 2018, where the index hit this extreme level, short-term weakness was common, but almost every event produced a rebound. The pattern is one of the reliable behaviors in Bitcoin’s behavior: When fear reaches its peak, the forward returns strongly to the upside.
Meanwhile, Bitcoin analyst Victor claimed That current drawdown is “The Close Your Eyes and Bid Type of Range,” which is historically associated with late stage flushes rather than tops of the cycle.
Related: Bitcoin recovery expected as liquidity conditions change, but US macro remains a threat
The short-term capitulation of the incumbent is deepening, but the end may be near
Fresh onchain data indicated Bitcoin is entering one of the most serious short-term capitulation phases of this cycle. STH (SOPR)’s profit-ratio fell to 0.97, confirming that short-term holders are continuing to sell at a loss. The ratio has now spent several weeks below 1.0, forming a clear capitulation band, a structure that historically appears near pivot points.
Similarly, the STH-MVRV has dropped below 1.0, indicating that almost all recent buyers are underwater. It mirrored previous episodes where unrealized losses spiked, panic selling accelerated, and weak hands depleted their supply.
The transfer of 65,200 BTC on exchanges at a loss further proves that fear is active, not theoretical. While this does not guarantee an immediate reversal, the combination of a sub-1.0 SOPR, deep negative MVRV, and loss-driven inflows suggests that the correction may be entering its final stages.
Related: Saylor Shrugs Off Suggestion Wall Street ‘Hurt’ Bitcoin Amid Latest Crash
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.
