Bitcoin Price Shows First Bottom Signal in 3 Years as Selling Pressure Cools

Bitcoin price has shown signs of stabilizing after recent volatility, with the market entering a consolidation phase. Recent selling pressure appears to have eased, with signs of institutional accumulation emerging. Analysts are closely watching whether this pause in the decline will evolve into a sustained recovery.

The market faced a major disruption this week after South Korean exchange Bithumb accidentally distributed 620,000 Bitcoin worth $44 billion in a promotional event. The exchange intended to distribute small cash rewards but mistakenly transferred large amounts instead. Bithumb quickly restricted trading and recovered 99.7% of the distributed Bitcoin.

The error caused a sharp selloff on the exchange, with Bitcoin prices slumping 17% to 81.1 million won on Bithumb. However, the price later rebounded to 104.5 million won. The incident highlighted the volatility of crypto markets and the risks associated with large-scale transfers.

Why Did This Happen?

Bithumb's error occurred during a promotional event intended to reward users with small cash incentives. Instead, users received large Bitcoin transfers, leading to immediate selling and price volatility. The exchange confirmed the incident was unrelated to hacking or security breaches and took swift action to recover the funds.

The error led to an emergency response from South Korean regulators, including the Financial Services Commission. Authorities announced they would conduct on-site inspections of Bithumb and other exchanges to assess internal controls and risk management. The incident has raised concerns about the regulatory framework governing virtual assets.

How Did Markets React?

Bitcoin prices on Bithumb briefly dropped to levels significantly below those on other exchanges. Some recipients of the accidental Bitcoin attempted to sell the tokens immediately, contributing to the price plunge. However, Bithumb managed to bring the situation under control within five minutes.

The broader market reacted with caution. Bitcoin, which had previously surged on Trump-related optimism, entered a correction phase, with prices dropping below key resistance levels. Institutional investors began showing interest at lower prices, with inflows increasing to accumulation addresses.

What Are Analysts Watching Next?

Bitcoin's recent price action suggests the market is in a holding pattern. While institutional buying has increased, the price remains below key resistance levels. Analysts are monitoring whether Bitcoin can reclaim the $74,500–$75,000 range, which would indicate stronger buyer control.

Historical indicators also suggest the market is nearing a bottom. The percentage of profitable Bitcoin supply has dropped to 50%, a threshold that has historically coincided with market bottoms. This level of underwater supply reduces selling pressure and encourages long-term holders to retain their positions.

Technical indicators like the Pi Cycle Top and Fibonacci retracement levels are also being closely watched. The Pi Cycle Top indicator currently shows cooling conditions, suggesting the market is not in an overheated state. A break above $71,672 would open the path toward $78,676, while a failure to hold this level could push prices back toward $63,000.

Market sentiment remains cautious, with derivatives showing defensive positioning. Traders are waiting for clearer signals before committing to new bullish bets. The short-term holder to long-term holder supply ratio has moved above its upper band, signaling increased short-term volatility.

Bitcoin's path forward depends on whether institutional buyers continue to accumulate and whether technical levels hold. A sustained move above $74,500 would be a key confirmation of a recovery phase. Conversely, a breakdown below $69,000 would retest the $60,000–$62,000 support area.

Investors should closely monitor market dynamics over the next few weeks. With selling pressure easing and accumulation increasing, the stage is set for a potential short-term rebound. However, until Bitcoin confirms a sustained recovery, caution remains warranted.