Are We Approaching a Bitcoin Bottom? Early Signs Suggest So

The recent downturn in the market has left many Bitcoin investors and enthusiasts uncertain. While some analysts predict a continued decline, others argue that Bitcoin is firmly positioned at a strong support level. Last week, Bitcoin saw a notable recovery, soaring approximately 15% to exceed $93,000. However, this rally was brief, as it dropped to $84,000 on Monday due to significant selling by various holders, resulting in a challenging start to the new week. Taking into account factors like capitulation, deleveraging, and seller fatigue, the latest report from Bitfinex Alpha indicates that Bitcoin may be nearing its lowest point in this cycle, paving the way for future gains. One indicator pointing towards a bottom is the extreme deleveraging that has occurred. Many speculative and leveraged traders were forced out of the market following the crash on October 10, which caused over $19 billion in liquidations. This purge is expected to contribute to a more stable and healthier crypto market for investors and long-term holders. Fundstrat's Tom Lee also shares a similar outlook, suggesting that once this cleansing phase is complete, new highs could be on the horizon. Additionally, short-term holder capitulation appears to reinforce the notion of a Bitcoin bottom. Retail traders and new investors have reacted to the market's dip with panic selling, leading to Entity-Adjusted Realised Losses exceeding $400 million, surpassing losses witnessed during previous major market lows. This spike in losses signals that capitulation may be nearing its conclusion, which could stabilize Bitcoin's price once selling pressure subsides. An analysis of Bitcoin's recent price chart suggests seller exhaustion is setting in, characterized by numerous small candlesticks, indicative of diminishing panic and reduced selling pressure. Consequently, the argument for Bitcoin approaching a bottom is strengthening. Meanwhile, some institutional investors remain optimistic despite the downward trend, as evidenced by a significant four-day influx into U.S.-listed Bitcoin exchange-traded funds (ETFs).