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▲ Bitcoin (BTC)/AI generated image
While Bitcoin (BTC) recorded its worst monthly decline since June 2022, three on-chain indicators simultaneously point to the capitulation of individual investors and the potential exhaustion of selling pressure.
According to the cryptocurrency specialized media outlet BeInCrypto on July 2 (local time), Bitcoin fell by 20.48% over one month amidst weakening demand and risk-off sentiment. The outlet reported that while Bitcoin has entered a deepening capitulation phase, some on-chain indicators also show signs of weakening selling pressure.
The first signal is the outflow of funds from Bitcoin spot ETFs. On-chain analytics firm Santiment stated that a total net outflow of $8.475 billion has occurred from Bitcoin ETFs since May 6. Santiment suggested that this trend should be viewed as an investor sentiment indicator rather than a mere warning of further collapse, explaining, “As outflow trends grow, the stronger the basis to view this period not as a new fear factor, but as frustration, fear, and individual investor capitulation.”
The second signal is a surge in the supply of Bitcoin in a loss state. According to Glassnode data, approximately 10.83 million BTC are currently in a loss state, exceeding the 9.22 million BTC in a profit state. The media pointed out that the phenomenon of loss-making volume surpassing profit-making volume has historically appeared during periods of widespread capitulation driven by new investors and financial stress.
Glassnode also indicated that long-term holders are starting to accumulate again. However, it warned that the possibility of final volatility expansion remains. Glassnode stated, “Bitcoin is moving from a distribution phase to an accumulation phase, but further confirmation is needed,” and “the market may need to undergo a final test of conviction before a sustainable uptrend emerges.”
The third signal is the Bitcoin Net UTXO Supply Ratio. Analyst Darkfost analyzed that this ratio remained in negative territory for a week, falling to -0.075, which constitutes a buy signal. He explained, “The last time such a trend appeared was during the bear market's end phase in late 2022,” but also drew a line, stating that this indicator is not a direct signal to pinpoint the bottom.
However, cautionary factors still remain in the Bitcoin market. The media presented a precedent where the Bitcoin Coinbase Premium turned negative in mid-January near $95,583 and then plunged by 33% to approximately $64,100 on February 24. The current negative trend is continuing for a longer period, implying that if the premium weakness persists, additional downside risk remains a central variable in the market.
[Article Key Summary]
-Bitcoin fell by 20.48% in one month, recording its worst monthly decline since June 2022.
-The three on-chain indicators presented by Santiment, Glassnode, and Darkfost simultaneously show deepening capitulation and the potential exhaustion of selling pressure.
-However, if the Coinbase Premium weakness continues, the risk of further decline still remains.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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