Capitulation Signals Surge as $10,000 Breakdown Looms—Has Bitcoin Truly Hit Bottom?
Capitulation Signals Surge as $10,000 Breakdown Looms—Has Bitcoin Truly Hit Bottom?
A claim has been raised that Bitcoin (BTC) has effectively formed a bottom signaling the end of the bear market, as it has produced historically extreme capitulation indicators during its recent sharp price decline.
According to cryptocurrency-focused outlet The Block on February 11 (local time), research and brokerage firm K33 assessed that as Bitcoin’s price plunged to around $60,000 last week, extreme conditions resembling capitulation emerged across spot markets, spot ETFs, and derivatives markets. Vetle Lunde, Head of Research at K33, analyzed that the recent downturn recorded abnormal extremes across various indicators, including trading volume and open interest, suggesting a very high likelihood that $60,000 will serve as a strong bottom.
Lunde cited as decisive evidence that the daily annualized funding rate for Bitcoin perpetual futures contracts fell to -15.46% on February 6, marking the lowest level since March 2023 during the banking crisis. This serves as a strong indicator that selling pressure in the market has reached its limits. In addition, the seven-day average annualized funding rate dropped to -3.5%, the lowest since September 2024, demonstrating that investor fear had reached an extreme level.
K33 forecasts that following this decline, Bitcoin will relieve overheated investor sentiment and enter a consolidation phase, compressing energy within a range between $60,000 and $75,000 for the time being. This sideways trend could persist for several weeks or even months, accompanied by subdued trading activity and potential retests of support levels. However, the likelihood of a further sharp drop below the recently formed low is considered low, and the market is expected to gradually regain stability.
Current technical indicators suggest that the market is moving past the peak of its downtrend, accompanied by record trading volumes in the 95th percentile. Volatility indicators in the options market and fund flows into spot ETFs also support the assessment that the market is nearing the final stage of capitulation. Lunde evaluated that Bitcoin has endured severe stress in the derivatives market while establishing a new support base, describing this as a necessary process for a future trend reversal.
Market participants are now encouraged to focus less on short-term fluctuations and more on the newly established price range, preparing for an upcoming full-scale recovery rally. Through this recent downturn, Bitcoin has successfully flushed out excessive leveraged positions and remains poised to secure strong rebound momentum depending on changes in the macroeconomic environment. Investors should monitor whether Bitcoin breaks above the upper boundary of the range suggested by K33 and reassess their asset allocation strategies from a long-term perspective.
Disclaimer: This article is provided for investment reference purposes only and we are not responsible for any investment losses incurred based on it. The content should be interpreted solely for informational purposes.
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