Bitcoin reveals a rare bullish cycle bottom signal before bouncing as futures bears tighten their grip

Bitcoin is flashing its most oversold signal on document amid its continued worth struggles in this current macroeconomic environment and chronic exchange-traded fund (ETF) outflows.

According to CryptoSlate knowledge, BTC’s worth dipped to round $62,700 during the last 24 hours, whereas its weekly relative energy index (RSI) printed roughly 25.7. BTC has risen to above $66,000 as of press time.

Alex Thorn, Galaxy Digital’s head of analysis, pointed out that this weekly RSI is “decrease than any time besides the darkest of bears.”

Thorn additionally famous that the one decrease readings since 2016 had been in November and December 2018, when BTC worth dropped from $6,000 to $3,000, and in June and July 2022, when crypto lending corporations Genesis and Three Arrows Capital collapsed.

As a outcome, market observers have described the current setup as “full capitulation,” arguing that comparable RSI extremes have traditionally been adopted by lengthy, messy recoveries quite than instantaneous reversals.

Capitulation alerts are flashing, however Bitcoin should be within the base-building section

Momentum has reached an excessive, however Bitcoin’s worth discovery nonetheless seems to be pushed by pressured promoting, fund de-risking, and the switch of stock from weaker holders to bigger consumers.

That distinction issues as a result of oversold situations don’t mechanically mark a bottom. They typically emerge when promoting turns into mechanical quite than emotional.

In that setup, liquidations, danger reductions, and thinner liquidity can hold a market pinned in a weak momentum regime even after the preliminary panic section begins to fade.

Glassnode knowledge helps that studying. The agency’s 90-day realized profit-and-loss ratio for Bitcoin has fallen beneath 1, a threshold it describes as an “extra loss-realization” regime.

In sensible phrases, realized losses are dominating the tape, which suggests sellers stay the marginal price-setters.

CryptoQuant is describing the identical interval as the deepest ache section of the present drawdown.

The agency says on-chain traders are posting their largest realized losses on document, whereas energetic merchants are absorbing the largest losses of this cycle. In its view, that stress has already modified who’s collaborating out there.

Its interpretation is that retail holders have largely capitulated, whereas whales proceed to build up at a higher depth.

That sample, weaker palms exiting whereas bigger holders soak up provide, is usually seen in later-stage corrections when a market begins constructing a base.

CryptoQuant additionally frames the transfer as a correction quite than a full bear market, evaluating the size of realized losses to November 2019, when Bitcoin later moved increased.

That comparability is finest handled as an analog quite than a forecast, however it reinforces the concept deep realized losses can coincide with longer-term alternative.

This is the place many RSI-based headlines miss the nuance. A record-low RSI can signal that capitulation is underway, and capitulation is usually a precondition for a bottom.

However, it doesn’t, by itself, affirm that the market has completed looking for a sturdy bid.

That helps clarify why excessive RSI readings are sometimes adopted by uneven, range-bound buying and selling as a substitute of a V-shaped rebound. If the market remains to be processing heavy realized losses, consumers are likely to demand reductions, whereas trapped holders might promote into rallies to cut back publicity.

In that framing, RSI extremes are sometimes higher understood as a section shift, from capitulation towards base-building, quite than a exact turning level.

Alphractal’s Sharpe Ratio evaluation factors in a comparable course, however by way of a totally different lens.

While CryptoQuant focuses on on-chain loss realization and holder conduct, Alphractal appears at risk-adjusted returns throughout the broader cycle. Its knowledge recommend Bitcoin is in a complicated stage of a restore course of, with the risk-versus-return profile extra compressed than it was a 12 months in the past.

The agency argues that allocating to BTC at present ranges implies decrease anticipated returns over the approaching months, but in addition decrease relative danger than earlier within the decline.

Historically, even decrease Sharpe Ratio readings have aligned with main bottoming phases, when the market’s risk-return profile turns into most compressed and long-term asymmetry begins to enhance.

Alphractal’s level is that Bitcoin could also be getting near that zone, however might not be there but.

Taken collectively, the alerts describe a market underneath extreme momentum stress, with realized losses nonetheless being absorbed and risk-adjusted returns more and more compressed.

That is according to a late-stage restore section. It is a constructive setup for base formation, however not definitive proof that the restore is full.

The lacking institutional bid, ETFs leak billions, and liquidity is skinny

What distinguishes this pullback from earlier ones is that one in every of Bitcoin’s most visible demand channels has started to fade.

Data from SoSo Value reveals US spot Bitcoin ETFs have recorded greater than $4.5 billion in web outflows throughout the 12 funds because the begin of the 12 months, extending a five-week redemption streak.

In prior drawdowns, the ETF complicated typically functioned as a regular marginal purchaser. However, that circulate has flipped this 12 months, with capital leaving the wrapper as costs weaken.

The impression has been extra pronounced as a result of market depth is thinner than it was throughout earlier selloffs.

Coin Metrics said the common spot Bitcoin order guide depth, measured inside plus or minus 2% of the mid-price, fell from roughly $40 million to $50 million between August and October 2025, then thinned additional to $15 million to $25 million, after which thinned additional in February.

In a shallower order guide, promote stress tends to maneuver worth extra aggressively, creating air pockets and sharper draw back gaps even within the absence of a contemporary catalyst.

Coin Metrics additionally pointed to slower stablecoin progress. Aggregate supply for USDT and USDC has been hovering round $260 billion, indicating the market isn’t seeing a sturdy wave of latest liquidity at a time when Bitcoin is making an attempt to ascertain a ground.

That sample suggests stagnation in contemporary inflows quite than a broad-based exit from crypto, however the distinction provides restricted near-term help when different demand sources are already weakening.

CryptoQuant’s derivatives knowledge provides to the defensive image.

The agency said bears stay in command of Bitcoin futures, with funding charges in detrimental territory across the present bottom zone of roughly $62,000 to $68,000. That is a notable shift from the sooner bottom close to $80,000, when funding stayed optimistic for a lot of the interval.

CryptoQuant additionally mentioned selling has been the dominant force since July 2025, with purchase restrict orders largely performing as passive absorbers quite than energetic drivers of worth. It added that the present promoting stress is the strongest in three months.

None of that guidelines out a rebound. Negative funding can create situations for a brief squeeze if bearish positioning turns into crowded and spot promoting begins to fade.

But for now, the construction nonetheless factors to a market buying and selling defensively quite than one displaying clear indicators of renewed danger urge for food.

Options markets have mirrored the identical warning.

CryptoSlate beforehand reported that demand for downside protection stayed elevated even after Bitcoin rebounded above $70,000 on Feb. 6, with merchants concentrated in $60,000 to $50,000 put strikes forward of the Feb. 27 expiry.

When put demand stays agency after a bounce, it normally alerts that merchants nonetheless assign significant odds to additional draw back, even when dip consumers are energetic in spot.

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