Is Bitcoin Forming a Bottom? Early Market Signals Suggest It’s Close

Bitcoin’s recent price action has confused many traders. The market has been sending mixed signals—some indicators point to more decline, while others show that Bitcoin may be approaching the end of its downtrend.

Last week, BTC staged an impressive rebound, gaining nearly 15% and climbing above $93,000. However, this recovery was short-lived. Heavy selling activity early this week pushed the price down to $84,000, causing renewed fear across the market.

Major Deleveraging Points Toward a Market Reset

According to the latest Bitfinex Alpha analysis, several on-chain indicators suggest that Bitcoin is very close to forming a bottom. One major factor is extreme deleveraging. Since the sharp October 10 crash, more than $19 billion worth of leveraged positions has been liquidated. Thousands of overexposed traders have been forced out of the market, reducing overall risk.

Why Many Analysts Believe Bitcoin Could Be Near Its Bottom — Key Signals and What to Watch Next

Massive deleveraging often marks the beginning of a healthier environment for long-term investors. Fundstrat’s Tom Lee recently noted that once this phase is complete, Bitcoin typically begins a new upward trend and can eventually reach new highs.

Capitulation Among Short-Term Holders

Another strong signal is short-term holder capitulation. Retail traders, emotional investors, and weekend FOMO buyers have been panic-selling their coins during the latest dip. As a result, Entity-Adjusted Realised Losses have surged beyond $400 million, which is higher than losses recorded in previous major market lows. When losses peak at this level, it usually means selling pressure is close to finishing.

Seller Exhaustion Is Becoming More Visible

Bitcoin’s recent candlestick pattern also hints at seller exhaustion. The chart is filled with small, indecisive candles, showing that panic sellers are almost out of the market. Once fear begins to fade, BTC often stabilizes and builds a stronger support base.

Despite the decline, institutional interest remains strong. U.S.-listed Bitcoin ETFs have recorded four straight days of inflows, proving that large investors still believe in Bitcoin’s long-term potential.

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