Bitcoin recently experienced a sharp decline, with the price nearly falling to the $60,000 level, but quickly rebounding. While the buy on the dip helped stabilize BTC around current levels, this pullback alone does not confirm a trend reversal.
Rather, the move appears to be a temporary pause in a broader correction, leaving investors wondering whether further declines are in store.
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What Bitcoin Signals Suggest
One of the characteristics of a bear market is an increase in relative unrealized losses, which measures the dollar value of Underwater Coin relative to market capitalization. This ratio soared to around 24% while Bitcoin was falling towards $60,000.
This level is well above the typical bull-to-bear transition zone, putting the market firmly in bear territory.
Although this indicator indicates a severe bear market, it remains below the historically extreme capitulation levels of over 50%. This suggests that Bitcoin is undergoing an active capitulation process rather than reaching a final bottom. Selling pressure is widespread but has not yet dissipated, and further volatility is likely as the market seeks equilibrium.
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Another perspective on investor behavior is the distribution of Bitcoin supply across wallet sizes. Data shows that wallets holding less than 0.01 BTC are steadily increasing their supply share. This group represents small retail participants who often react emotionally to price changes, but are currently hoarding.
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At the same time, wallets holding between 10 and 10,000 BTC showed modest net distributions during the decline. This divergence is notable as public sentiment toward social platforms remains overwhelmingly bearish.
Despite the negative comments, small traders have been quietly adding exposure, demonstrating their belief that current prices offer value.
This imbalance suggests that optimism has not been fully reset. Ideally, deeper bearish phases would see retail capitulation coincide with bearish social indicators.
Until small retail supply starts to decline, it will be difficult for a rebound to gain lasting traction, and the upside of any near-term recovery attempt may be limited.
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Bitcoin continues to witness support
Despite the price weakness, network activity is showing contrasting signals. Bitcoin has seen a rapid increase in new addresses over the past week. The number of investors making on-chain transactions for the first time increased by approximately 37%, indicating new participation in the network.
This growth reflects continued interest in Bitcoin as the price corrects. New entrants often emerge during periods of high volatility and seek to secure early positions for a potential recovery.
While there is no guarantee of an immediate rally, the increase in address activity suggests that confidence in Bitcoin’s long-term value proposition remains intact.
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This influx of new users allows us to provide support during the integration phase. However, if macro pressures persist, even strong network growth may have difficulty offsetting widespread risk-off conditions across financial markets.
BTC price levels to watch
Bitcoin price is trading around $69,077 at the time of writing, after rebounding from support at $63,007 during the recent sell-off. Aggressive downside buying prevented further declines towards $60,000. This defense highlights strong demand at lower levels, at least in the short term.
Despite this recovery, downside risks remain high. The broader macro outlook suggests that Bitcoin could face further collapse in the coming weeks. Losing the support at $63,007 would strengthen the bearish continuation and the next major downside target would be around $55,500 based on the historical support zone.
A short-term recovery is still possible if new capital inflows continue. The increase in new address activity could allow Bitcoin to consolidate and reclaim $71,672 as support. Consolidating this level would negate the immediate bearish setup and signal stabilization, but would not completely negate the broader bear market structure.
