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▲ Bitcoin (BTC)/AI generated image
Bitcoin (BTC) recorded its worst monthly decline since June 2022, while three on-chain indicators simultaneously point to the capitulation of retail investors and the potential exhaustion of selling pressure.
According to cryptocurrency media outlet BeInCrypto on July 2 (local time), Bitcoin fell by 20.48% over the month amidst contracting 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 outflows 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 simple warning of further declines, explaining, “The larger the outflow, the stronger the evidence to view this period not as a new fear factor, but as frustration, fear, and retail investor capitulation.”
The second signal is a surge in supply 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 outlet pointed out that this phenomenon, where the amount of assets in loss exceeds those in profit, has historically occurred during periods of widespread capitulation driven by new investors and financial stress.
Glassnode also suggested 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,” adding, “The market may need to undergo a final test of conviction before a sustainable uptrend can emerge.”
The third signal is the Bitcoin Net UTXO Supply Ratio. Analyst Darkfost analyzed that this ratio remained in negative territory for a week and fell to -0.075, which corresponds to a buy signal. He explained, “The last time such a trend appeared was during the end of the bear market in late 2022,” but also drew a line, stating that this indicator is not a direct signal for pinpointing the bottom.
However, cautionary factors still remain in the Bitcoin market. The outlet cited the precedent of the Bitcoin Coinbase Premium turning negative in mid-January near $95,583 and then plummeting by 33% to approximately $64,100 on February 24. As the current negative trend continues for a longer period, if the premium weakness persists, additional downside risk remains a central variable in the market.
[Key Article Summary]
-Bitcoin fell by 20.48% over the month, marking its worst monthly decline since June 2022.
-The three on-chain indicators presented by Santiment, Glassnode, and Darkfost simultaneously show deepening capitulation and 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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