Is Bitcoin Near a Bottom? Early Indicators Point to Yes (Bitfinex Alpha)

Bitfinex Alpha reveals that selling pressure has subsided and BTC is close to the lowest point in this cycle.

The recent downtrend in the market has left many bitcoin investors and market enthusiasts confused. This is because forecasters and a number of factors point to a further downtrend, while some argue that the world’s leading cryptocurrency is in a strong support area.

Clearly, BTC witnessed a significant price recovery last week, rising around 15% to above $93,000. However, this move was short-lived as the stock fell $84,000 on Monday amid heavy selling by many holders, getting the new week off to a rocky start.

Debt reduction and capitulation

Taking into account factors like capitulation, deleveraging, and seller exhaustion, the latest Bitfinex Alpha release suggests bitcoin is very close to a bottom, marking the lowest point of this cycle before recovering and reaching new highs.

One factor that points to a bottom is extreme deleveraging. Undoubtedly, thousands of speculators and leveraged traders have been forcibly thrown out of the market, beginning with the October 10 crash that resulted in more than $19 billion in liquidations.

After this wave of risky traders, the crypto market is expected to become more stable and healthy for investors and long-term holders. This also lines up with a recent prediction from Tom Lee of Fundstrats, who noted that once the market completes this flushing, it could reach new highs.

In addition to extreme deleveraging, capitulation of short-term holders is another factor that points to a bitcoin bottom. Many retail traders, weekend FOMO buyers, and new and nervous investors have reacted emotionally to the market dip and panic sold their holdings.

Realized losses adjusted for the entity are therefore the case reaches a peak of more than $400 million, surpassing losses during previous major market lows. This pace of losses suggests that the capitulation is coming to an end, and once the selling pressure is no longer there, the bitcoin price stabilizes.

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Seller exhaustion

A closer look at the bitcoin price chart over the past few days indicates seller exhaustion as it is filled with many small candlesticks, indicating that panic and fear have almost burned out and selling pressure has subsided. The conclusion is that bitcoin has almost reached a low point.

Meanwhile, some institutional investors haven’t let the downward trend cloud their positive expectations. This is evident from the massive four-day inflow into US-listed Bitcoin exchange-traded funds (ETFs).