Bitcoin's Volatility: Capitulation and Recovery Signs Emerge

Bitcoin's recent price volatility, triggered by the Bybit hack, has sparked concern among short-term holders, leading to a significant capitulation event. This article explores the market dynamics and potential recovery signs following the hack.

Data from COINOTAG reveals that short-term holders have actively capitulated, with a staggering -43.9K BTC in losses over the last 24 hours. This panic selling is reminiscent of previous bear market dynamics, which often precede a recovery phase. Historical data suggests that substantial capitulation can signal an opportunity for seasoned traders to enter the market at a more favorable price.

The investigation into the 90-Day Active Supply of Bitcoin reveals a consistent downward trajectory in active supply, aligning with recent market conditions. From its peak of 6M BTC in late 2024, active supply has dwindled to around 4M BTC in early 2025, suggesting reduced market activity and heightening concerns about liquidity. This trend notably follows historical patterns where similarly declining active supply foreshadowed stabilization in market prices.

Recent metrics indicate a consequential shift in BTC netflow across exchanges, revealing a significant net outflow of -546.11 BTC over the last 24 hours. This movement correlates with traders withdrawing funds to secure against market volatility, which historically is a positive sign preceding upward price adjustments. With a shift from net inflows to significant outflows, indicators suggest a transitioning sentiment among BTC holders, potentially recuperating from recent fears, while also hinting at current purchasing interest within the market.

In summary, the combination of substantial STH loss capitulation and declining liquidity levels has historically predicted upcoming price rebounds. As selling pressure continues to decrease, there are signs that indicators may be aligning to suggest a potential recovery period for Bitcoin. Traders and investors should remain vigilant, keeping markets closely monitored for shifts in sentiment, as past patterns often offer valuable insights into future price movements.