Bitcoin (BTC) experienced a sharp downturn on Tuesday, falling 4% within 24 hours to an intraday low of $62,700, as short-term holders resumed panic selling. Market metrics suggest that the cryptocurrency may be entering a full capitulation phase, with the weekly relative strength index (RSI) approaching record oversold levels. Analysts warn that while further downside is possible, conditions for a potential bottom may be forming.

Crypto Markets: Capitulation Signals Intensify

The Short-Term Holder SOPR (STH-SOPR), which tracks whether short-term holders are selling at a profit or a loss, dropped below 1 following US President Donald Trump’s announcement of a new 15% global tariff. At 0.95, the metric indicates renewed loss realization by short-term holders reacting to macroeconomic uncertainty rather than long-term investors offloading strategically.

Bitcoin’s seven-day moving average of short-term holder net realized losses has cooled to $500 million per day after peaking at $1.24 billion on February 6, according to CryptoQuant and Glassnode data. While the intensity of daily losses has moderated, the broader market remains under pressure as participants continue capitulating, reinforcing a base formation phase that often precedes longer-term recoveries.

The 90-day simple moving average of Bitcoin’s realized profit/loss ratio has fallen below 1, signaling a shift into an excess loss-realization regime. Analysts note that this metric reflects a period where holders are crystallizing losses at scale, a hallmark of full capitulation.

Technical Indicators: Weekly RSI Signals Potential Bottom

Bitcoin’s weekly RSI—a measure of momentum and speed of price changes—hit 25.71, its most oversold level since July 22, just months before BTC rebounded from $15,500 to a subsequent bull run. Historically, extreme oversold conditions have coincided with short-term price weakness followed by sustained recoveries, suggesting that Bitcoin may be approaching a macro bottom.

Analyst Nic Puckrin observed on social media: “More downside is likely, but a bottom could be coming soon.” He highlighted that the current RSI is lower than levels seen after the 3AC and Luna crashes, reinforcing the pattern of capitulation followed by recovery. Meanwhile, Bitcoin’s fear and greed index has reached historic lows, and bullish sentiment predicting new all-time highs is waning—a contrarian indicator that often precedes market stabilization.

Investor Psychology: Short-Term Weakness, Long-Term Opportunity

The current capitulation appears concentrated among short-term holders, who are reacting to external shocks rather than structural shifts in the market. This behavior is typical during phases of heightened fear, where immediate losses trigger reactive selling. Long-term investors, in contrast, have remained largely on the sidelines, preserving positions and contributing to a potential support layer beneath the current price.

Analysts suggest that understanding this dynamic is key for strategic positioning. Panic-driven outflows may temporarily amplify volatility, but the capitulation phase often clears weak hands, consolidates supply, and lays the groundwork for renewed accumulation by institutional and retail participants alike.

Forward-Looking Perspective: Risks and Opportunities

Bitcoin’s dip below $63,000 underscores the market’s sensitivity to macroeconomic and geopolitical news. While technical indicators signal oversold conditions, risks remain, including further tariff announcements, regulatory shifts, or broader equity market shocks.

Conversely, the capitulation phase may present opportunities for long-term investors seeking entry points at historically discounted levels. The combination of extreme RSI readings, STH-SOPR trends, and market sentiment metrics suggests that a macro bottom could be forming, providing a foundation for a future recovery if broader conditions stabilize.