Key Points
- Bitcoin (BTC) shows potential for a market rally after recent panic selling-driven capitulation.
- Increased buying activity and historical data suggest a possible price rebound.
Bitcoin’s Market Potential
Recent analysis indicates a potential market rally for Bitcoin following a recent capitulation caused by panic sellers. The buying activity is slowly rising, supporting a rebound narrative. Over the past week, Bitcoin has experienced a bearish trend, recording a significant 10.77% loss, marking its largest decline in the past month. In the last 24 hours, this bearish trend has continued with a 2.38% drop, marking the first major market capitulation since August 2024.
Historical data presents an opportunity for a major price rebound, suggesting that a new high could be on the horizon as soon as buying activity resumes. Short-term holders (STH) play a crucial role in determining market movements based on their reactions.
Short-Term Holders and Market Movements
Analyzing the STH-SOPR (Spent Output Profit Ratio) alongside Bollinger Bands provides key insights into potential price action. Historically, when the STH-SOPR drops below the lower Bollinger Band, Bitcoin tends to experience a strong rally, recovering losses quickly. These gains typically range between 8% and 42%. At the time of writing, Bitcoin is currently in this phase. If history repeats, the asset could see a significant bounce to the upside, posting further gains.
Despite major capitulation, Bitcoin just recorded its largest market capitulation of 2025 and the first since August 2024, largely driven by new investors. This resulted in 79,000 BTC being sold in the spot market, along with an additional $1.7 billion in liquidated derivative contracts, pushing Bitcoin below $90,000 for the first time in three months.
A closer look at the chart shows that after August’s major capitulation, Bitcoin’s price began rising steadily. With a similar event in the past 24 hours, Bitcoin now has a strong chance of a sharp upside move. However, the rally depends on whether traders are buying.
Increasing Buying Activity
Bullish sentiment is gradually increasing. In the past four hours, there has been a massive short liquidation of $11.59 million, compared to just $663,900 in long liquidations. When short liquidations significantly outpace long liquidations, it indicates the market is moving against sellers. In this case, with 17.4 times more short liquidations than long, strong buying activity is evident.
Funding rate data, another key market indicator, confirms that long traders dominate. A positive funding rate reading of 0.0039% supports this trend. If buying activity continues to increase, Bitcoin could see a strong price surge in the coming weeks.
