Short-Term Holder Bitcoin Supply in Loss and Market Capitulation: A Systemic Risk Analysis

The Bitcoin market in late 2025 is grappling with a confluence of systemic risks, driven by the deteriorating position of short-term holders (STHs) and a wave of capitulation that mirrors the turbulence of the FTX-era collapse. With over 5.4 million BTC in STH holdings-up 24.7% since August 2025-these investors are now collectively in a realized loss zone, a critical indicator of market fragility according to on-chain data. The recent influx of 2.1 million BTC deposited on Binance in 2025, including 327,000 BTC in Q4 alone, has further amplified concerns about liquidity stress and panic selling as data shows. This article examines the interplay between STH behavior, record liquidations, and historical parallels to the 2022 FTX crisis, arguing that Bitcoin's $94K support level may face a decisive test in the near term.

STH Realized Losses and the Capitulation Signal

Bitcoin's STH cohort has become a focal point of bearish momentum. Data from on-chain analytics reveals that 99% of short-term holders are currently in unrealized losses, with a -1.4 realized profit/loss ratio-a metric eerily similar to the April 2025 correction and the 2022 FTX-era sell-off according to a market analysis. This sharp decline reflects a market dominated by fear, as Bitcoin's price has formed four successive lower lows since peaking at $126,000 in early October. The 2.1 million BTC deposited on Binance in 2025, particularly the 327,000 BTC added in Q4, is widely interpreted as evidence of capitulation as reported. Traders consolidating funds on centralized exchanges during periods of uncertainty often signal a loss of confidence, a pattern observed repeatedly in prior market cycles.

Record Liquidations and Fading Rate-Cut Hopes

The systemic risks are further compounded by record liquidations. On October 30, 2025, Bitcoin's price plummeted to $108,000 following the Federal Reserve's cautious stance on rate cuts, triggering $820.1 million in liquidations as reported by crypto analysts. Traders holding long positions accounted for $653.62 million of these losses, with Bitcoin-specific liquidations reaching $365.44 million. This event underscores the fragility of leveraged positions in a market already strained by ETF outflows exceeding $1.1 billion and a liquidity squeeze according to on-chain data. The parallels to the FTX-era are striking: in 2022, similar patterns of STH capitulation and liquidation cascades preceded a prolonged bear market. Today, the same dynamics appear to be unfolding, albeit against a backdrop of historically high Realized Cap levels, which suggest that long-term holders (LTHs) remain resilient as market analysis indicates.

The $94K Support Level: A Crucial Psychological Hurdle

Bitcoin's descent below $98,000 has brought the critical $92K–$94K support zone into focus. This level, historically tied to the 6–12 month holder cost basis, could serve as a temporary floor if LTHs begin to accumulate aggressively according to on-chain data. However, the current environment is fraught with challenges. The 592,000 BTC at risk of liquidation-a figure that includes both retail and institutional positions-highlights the precarious balance between bearish momentum and potential stabilization as market analysis shows. Analysts like CryptoQuant's Ki Young Ju caution that while the Realized Cap remains at all-time highs, the absence of widespread capital flight indicates a cyclical correction rather than a full bear market as reported in market analysis. Yet, the proximity of the $94K level to the STH cost basis means any further downside could accelerate selling pressure, creating a self-fulfilling prophecy of capitulation.

Implications for Systemic Risk and Near-Term Outlook

The interplay between STH losses, exchange inflows, and liquidation events paints a picture of a market teetering on the edge of a deeper correction. The 2.1M BTC deposited on Binance, combined with the -1.4 realized P/L ratio, suggests that short-term holders are increasingly vulnerable to margin calls and panic selling according to data analysis as market indicators show. If Bitcoin fails to hold the $94K level, the next support zone at $85K could become a focal point for further downside. However, the resilience of the Realized Cap and the cyclical nature of Bitcoin's market cycles offer a counterpoint to the bearish narrative. Historically, such corrections have been followed by renewed accumulation phases, particularly when LTHs begin to absorb discounted supply as market analysis indicates.

In conclusion, the current environment reflects a high-stakes test of Bitcoin's structural strength. While the risks of a deeper bearish phase are real, the market's ability to stabilize will depend on the actions of long-term holders and the Federal Reserve's policy trajectory. For now, the $94K support level remains a critical battleground, with the potential to either halt the decline or catalyze a more severe correction.