Bitcoin Sell-Off Hit $1B Losses Push BTC to $80K, Signs FTX Crash

Bitcoin Price Drop Matches FTX Crash Level 2022: Extreme Fear Hits 11

The current market downturn is the steepest fear-driven selling wave in Bitcoin since the 2022 FTX Crash Levels, with on-chain data showing that during the last market downturn, there were massive realized losses and growing panic among short-term holders.

Bitcoin Price Slips to April Prices

Bitcoin Price has dropped to approximately $83,000, returning to the price levels experienced in April. The fall follows a steep decrease from its all-time high of $126,210 in the early months of October. The high selling pressure momentarily drove BTC to $80,500. A rapid and disconcerting 36% correction.

Source: Kashif Raza X

On-chain data provided by Glassnode shows that investors are currently experiencing losses of up to $1 billion per week, the highest since the cataclysmic collapse of FTX in November 2022. The abrupt increase in the realized losses accentuates the magnitude of capitulation that is permeating the market.

New Purchasers Head the Retiring: Fear of Selling in the Short Run.

According to Glassnode, short-term holders who are mostly investors who purchased Bitcoin in the recent weeks or months are the ones leading the current selling wave. These participants are liquidating positions unprofitably as panic reigns.

According to analysis, short-term holder selling tends to be a local bottom, but only when Bitcoin can recover its average cost basis quickly. Otherwise, the company cautions, it can be an indication of a more fundamental reversal of trend or the beginning of a more extensive bearish period.

Market Sentiment Shifts to 'Extreme Fear'.

The Crypto Fear & Greed Index has dropped to Extreme Fear, which indicates uncertain industry trends. Trading volumes have been increasing with investors stampeding to get out of positions, and the key support levels are being broken without opposition.

Source: Alternative me

Other commentators believe that this recession may spell the conclusion of the bull cryptocurrency space that started in 2023. However, others disagree. Samson Mow, CEO of Jan3, feels that the market is not yet in a full bull stage and hence it is not in an actual bearish.

Analysts Evaluate Potential scenarios.

According to Mati Greenspan of Quantum Economics, Bitcoin is cutting support levels like butter, and bears could hit their downside targets even sooner than anticipated. Major crypto sphere bottoms can follow this kind of capitulation, as the March 2020 and June 2022 crashes indicate that capitulation is a common occurrence before major bottoms.

In the FTX-induced crash of 2022, Bitcoin dropped $33,000 to under $16,000, and finally hit a low of around $15,700 before starting to rebound two months later. Other analysts are of the opinion that a similar bottoming process may occur.

Nevertheless, long-term bulls are not pessimistic. Fundstrat analyst Tom Lee believes that Bitcoin will recover well, and it will soar up to $150,000 - $200,000 by January 2026.

Source: CMC

Conclusion

Analysts observe that such extreme capitulation is usually an indication of exhaustion, although there is fear-induced selling and record losses. Uncertainty prevails, but history has indicated that there is a chance of opportunity in these turbulent times for patient investors.