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In the past three days, Bitcoin (BTC) 
$101,765 has experienced total realized losses amounting to $2.75 billion, straining investors’ patience. On-chain data reveals that short-term investors are particularly inclined to sell at a loss, with BTC’s breach of the average cost of $113,000 moving this group to a “break-even” point and entering a capitulation phase. This scenario, according to analysts, indicates that the market is purging weak hands, allowing bears to dominate the scene.
The $110K Recovery: A Bull Trap?
Recent losses represent the highest realized loss rate since April. The 8% drop over three days nullified the short-lived recovery at $110,000. With decreasing buying depth and trading volumes, the risk of a potential break below $100,000 has increased.
BTC’s recovery to $110,000 was based not on sustainable demand but on temporary liquidity flow. According to CoinGlass data, the long/short ratio exceeded 60% on October 13, and these heavily leveraged positions were swiftly liquidated as the market shifted direction. With nearly $1 billion in positions liquidated, this surge converted into a “bull trap.” Analysts emphasize that a break below $100,000 is becoming increasingly likely amid the current scenario.
Risks continue to rise for short-term investors in the current climate. Although long-term investors still find themselves in profit, the increasing selling pressure might prompt this group to realize gains as well.
On-Chain Data Confirms Capitulation
Data providers like Glassnode and CryptoQuant note a sharp increase in realized losses while the influx of new money into the market is dwindling. This situation signals a classic capitulation phase. Furthermore, the shift to negative funding rates in futures trading indicates the market is pricing in bearish expectations.
This scenario mirrors a similar correction period observed in 2022. During that time, short-term investors also sold at a loss while long-term holders shifted to an accumulation phase. The possibility of this scenario repeating itself is now being discussed.
In conclusion, Bitcoin is currently navigating through a significant turbulence phase. The rise in realized losses, combined with weak spot demand and support levels, could herald another wave of decline in the market. However, as seen in the past, such capitulation phases can also present new accumulation opportunities for long-term investors. It is crucial for investors to monitor on-chain trends rather than focusing on short-term market movements.
