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Finbold

08/23/2023

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Crypto capitulation ‘in the air’ as investors sell Bitcoin in panic

In the tumultuous landscape of cryptocurrency markets, the past week has witnessed an intense struggle as prices faced remarkable pressure.  Leading the descent, Bitcoin (BTC) plunged to a concerning $25,400...

Crypto capitulation ‘in the air’ as investors sell Bitcoin in panic

In the tumultuous landscape of cryptocurrency markets, the past week has witnessed an intense struggle as prices faced remarkable pressure. 

Leading the descent, Bitcoin (BTC) plunged to a concerning $25,400 before slightly recovering to $26,000. Despite this brief respite, the crypto realm continues to grapple with formidable challenges, exhibiting a lack of immediate recovery signs.

In light of this downturn, market analyst Ali Martinez said capitulation phase ‘is in the air’ for the cryptocurrency phase. One of the indicators signaling capitulation is a steep sell-off among short-term Bitcoin holders, the expert highlighted on August 23.

In particular, Martinez analyzed the short-term holder net unrealized profit/loss (STH-NUPL), which serves as an indicator of profit and loss, as assessed by the behavior of short-term Bitcoin investors. 

“Capitulation is in the air as short-term BTC holders have been offloading heavily this past week.”

– Martinez said in the tweet.
Short-term holders offloading BTC. Source: Ali Martinez Twitter

What does this mean?

Crypto market capitulation represents a period of panic selling and declining prices. During this phase, investors exit their existing positions by selling as quickly as possible, leading to a sharp and quick decline in cryptocurrency prices

If Martinez’s expectations that capitulation may be near, it could indicate that the recent declines in BTC and other crypto assets may not have been the bottom. Instead, it may signal that there is further downside room, particularly if this trend of rapid offloading of holdings continues.

The capitulation phase ends when the period of panic selling activity is over.

Capitulation is typically followed by either a consolidating period – characterized by sideway price movements – or by an uptrend that would potentially mark the beginning of a bull market

Altcoins losing Total Value Locked (TVL)

Alongside a chaotic sell-off in short-term Bitcoin holdings, major altcoins such as Ethereum (ETH), Solana (SOL), and Cardano (ADA) have witnessed a steep drop in their Total Value Locked (TVL) over the past week of 11.9%, 9.1%, and 10.6%, respectively. 

TVL refers to the cumulative amount of assets, usually in the form of cryptocurrency or tokens, locked within a particular decentralized finance (DeFi) protocol or platform. It serves as a key metric for investors as it provides insights into the popularity and utilization of a DeFi ecosystem.

Meanwhile, other popular altcoins like Avalanche (AVAX), Tron (TRX), Binance Smart Chain (BSC), and Polygon (MATIC) TVL are also down over the past week.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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