Bitcoin is showing its most oversold signal ever, amid the ongoing price battle in this current macroeconomic environment and continued outflows from exchange-traded fund (ETF) funds.
According to CryptoSlate According to data, the price of BTC fell to around $62,700 over the past 24 hours, while the weekly relative strength index (RSI) traded around 25.7. BTC has risen above $66,000 at the time of writing.
Alex Thorn, head of research at Galaxy Digital, pointed out that this weekly RSI is “lower than ever, except for the darkest bears.”
Thorn also noted that the only lower numbers since 2016 were in November and December 2018, when the BTC price fell from $6,000 to $3,000, and in June and July 2022, when crypto lending companies Genesis and Three Arrows Capital collapsed.
As a result, market observers have described the current setup as “complete capitulation,” arguing that similar RSI extremes have historically been followed by prolonged, messy recoveries rather than immediate reversals.
The capitulation signals are flashing, but Bitcoin may still be in the base-building phase
The momentum has reached an extreme, but Bitcoin’s price discovery still appears to be driven by forced selling, de-risking funds, and the transfer of supplies from weaker holders to larger buyers.
That distinction is important because oversold conditions do not automatically mark a bottom. They often arise when selling becomes mechanical rather than emotional.
In that setup, liquidations, risk reductions and lower liquidity can keep a market in a weak momentum regime even after the initial panic phase begins to fade.
Glassnode data supports that reading. The company’s 90-day realized P/E ratio for Bitcoin has fallen below 1, a threshold it describes as an “excess loss realization” regime.
In practical terms, realized losses dominate the tape, indicating that sellers remain the marginal price setters.
CryptoQuant does to describe the same period as the deepest pain phase of the current downturn.
The company says on-chain investors are posting their largest realized losses ever, while active traders are absorbing the largest losses of this cycle. According to her, that stress has already changed who participates in the market.
Its interpretation is that retailers have largely capitulated, while whales continue to accumulate with greater intensity.
That pattern, where weaker hands exit while larger holders absorb supply, is often seen in later-stage corrections as a market begins to build a base.
CryptoQuant also views this move as a correction rather than a full-blown bear market, comparing the magnitude of losses realized to November 2019, when Bitcoin later moved higher.
That comparison is best thought of as an analogy rather than a prediction, but it reinforces the idea that profound losses can coincide with longer-term opportunities.
This is where many RSI-based headlines miss the nuance. A record-low RSI can be a signal that capitulation is coming, and capitulation is often a prerequisite for a bottom.
However, it does not in itself confirm that the market is done looking for a sustainable offer.
That helps explain why extreme RSI readings are often followed by choppy, range-bound trading rather than a V-shaped rebound. If the market is still digesting heavy realized losses, buyers tend to demand discounts, while captive holders may sell in rallies to reduce exposure.
In that context, RSI extremes are often better understood as a phase shift, from capitulation to base building, rather than as a precise turning point.
Alphractal’s Sharpe Ratio analysis points in a similar direction, but through a different lens.
While CryptoQuant focuses on on-chain loss realization and holder behavior, Alphractal looks at risk-adjusted returns over the broader cycle. The data shows that Bitcoin is in an advanced stage of a recovery process, with its risk-reward profile more compressed than a year ago.
The company states that the allocation to BTC at current levels implies lower expected returns for the coming months, but also lower relative risk than earlier in the decline.
Historically, even lower Sharpe Ratio values have corresponded to key lows, when the market’s risk-reward profile becomes most compressed and long-term asymmetry begins to improve.
The point of Alpharactal is that Bitcoin may be getting close to that zone, but it may not be there yet.
Taken together, the signals describe a market under severe momentum stress, with realized losses continuing to be absorbed and risk-adjusted returns increasingly compressed.
This corresponds to a late stage repair phase. It is a constructive arrangement for basic building, but not definitive proof that the repair has been completed.
The missing institutional bid, ETFs are leaking billions and liquidity is scarce
What sets this pullback apart from previous ones is that one of Bitcoin’s most visible demand channels is starting to fade.
Data from SoSo Value shows that US spot Bitcoin ETFs have recorded net outflows of more than $4.5 billion across the twelve funds since the start of the year, extending the five-week redemption streak.
In previous withdrawals, the ETF complex often functioned as a stable marginal buyer. However, this flow has reversed this year, with capital coming out of the wrapper as prices weaken.
The impact has been greater because the market depth is smaller than during previous sell-offs.
Coin statistics said the average depth of the Bitcoin order book, measured within plus or minus 2% of the mid-price, fell from about $40 million to $50 million between August and October 2025, then fell further to $15 million to $25 million, and then fell further in February.
In a smaller order book, selling pressure tends to impact prices more aggressively, creating air pockets and sharper downside gaps even in the absence of a new catalyst.
Coin Metrics also pointed to slower growth of stablecoins. The total supply for USDT and USDC is hovering around $260 billion, indicating that the market is not seeing a strong wave of new liquidity at a time when Bitcoin is trying to reach a bottom.
That pattern suggests a stagnation of new inflows rather than a broad exit from crypto, but the distinction offers limited support in the near term when other sources of demand are already weakening.
CryptoQuant’s derivatives data contributes to the defensive picture.
The company said Bears remain in control of Bitcoin futures, with funding rates in negative territory around the current bottom zone of around $62,000 to $68,000. That’s a notable shift from the previous bottom of nearly $80,000, when funding remained positive for most of the period.
CryptoQuant also said that selling has been the dominant force since July 2025, with buy limit orders largely acting as passive absorbers rather than active price drivers. It added that current selling pressure is the strongest in three months.
None of this rules out a rebound. Negative financing can create conditions for a short squeeze as bearish positioning becomes crowded and spot selling begins to fade.
But for now, the structure still points to a market that is trading defensively and not one that is showing clear signs of renewed risk appetite.
The options markets have expressed the same caution.
CryptoSlate previously reported that demand for downside protection remained high even after Bitcoin rebounded above $70,000 on February 6, with traders focusing on $60,000 to $50,000 and setting strikes ahead of the February 27 expiration.
When put demand remains firm after an upswing, it is usually a sign that traders are still assigning meaningful odds to a further downtrend, even as dip buyers are active on the spot.