Bitcoin is struggling to find support after losing the $85,000 level and falling to $81,000, marking its weakest point since early spring. Bulls have clearly lost control of the trend, and fear is now dominating the market, with sentiment quickly shifting from caution to outright panic. Many traders are calling for a confirmed bear market, while others claim the move is an orchestrated shakeout designed to flush out weak hands before the next macro leg.
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Amid the chaos, top analyst Axel Adler shared new insights that highlight a structural shift beneath the surface. Until yesterday, short-term holders (STHs) seemed relatively stable despite the correction. However, the situation has now changed dramatically. The Realized Gain/Loss component – which measures whether investors are selling at a profit or a loss – has fallen to -1, indicating broad loss realization across the STH cohort.
This measure, turning negative for the first time in weeks, confirms that capitulation among recent buyers is accelerating, a dynamic that has historically increased pressure on the spot market. While the sell-off is severe, some analysts argue that these conditions resemble previous manipulation-driven liquidity grabs, where deep corrections ultimately laid the foundation for sharp rebounds.
STH panic mirrors beyond cyclical bottom signals
Adler explains that the latest spike in short-term holder panic (STH) is not an isolated event; it is very similar to patterns we saw during previous market bottoms. The graphic clearly shows that similar increases in STH loss realization occurred in July 2021 and again during the 2022-2023 bear market, each time leading to accelerated selling, liquidity stress and deeper short-term corrections.
These phases were characterized by fear-driven capitulation, with recent buyers quickly dumping coins, often exaggerating the downside, but ultimately exhausting available selling pressure.
Today, that same structure appears again. With the STH Realized P/L falling sharply and the STH-MVRV ratio below 1, fear has forced many recent entrants into losses, leading to panic attacks. Adler notes that these types of forced selling usually manifest near the end of corrections, not at the beginning. Once STHs capitulate, the market often enters a period of stabilization as long-term holders absorb supply.
Despite the extreme sentiment in the social and derivatives markets, several analysts argue that this setup could create the conditions for recovery. Historically, when STH panic peaks and long-term holders remain steady, Bitcoin has often seen a strong rebound in the weeks that follow.
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BTC tests key demand levels
Bitcoin has entered a steep downtrend and the chart clearly reflects the intensity of the current sell-off. BTC has fallen to the $83,000 – $84,000 range, marking one of the sharpest declines of this cycle. The collapse accelerated as the price lost the $92,000 and $90,000 support points, and the chart now shows a near-vertical move down – a classic sign of capitulation-driven selling.
On the daily time frame, BTC is trading well below the 50-day, 100-day, and 200-day moving averages. All three have started on a downward slope and are forming a fully bearish alignment that signals a weakening of momentum over multiple time horizons.
The price is currently trying to stabilize around the 200-day moving average (red line), one of the last major trend supports in a macro bull structure. A clean close below this level could open the door to a deeper downtrend.
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Volume has risen aggressively in recent sessions, confirming panic participation. Unlike previous corrections, this one shows a sustained distribution without significant rebounds, indicating forced selling by short-term holders and large entities.
However, the graph also shows it early signs of sales exhaustion. Candles are printing long, lower wicks, and intraday volatility has increased – conditions that often precede a temporary bottom.
Featured image of ChatGPT, chart from TradingView.com