This Monday, the cryptocurrency market experienced a significant shake-up when the Bitcoin price correction dragged the asset’s value down to the $89,000 level. Independent analyst VICTOR described this pullback as a “close your eyes and bid” opportunity, suggesting that we are in an ideal buying zone. According to this expert, current levels do not indicate a cycle top, but rather a leverage washout phase that typically precedes bullish movements.
Data reveals that this 26.7% drop represents the most severe adjustment of the current bull market, slightly surpassing the decline recorded in April. On the other hand, researcher Axel Adler Jr. highlighted that the local market stress index remains elevated, sitting at 67.82 points following the massive sell-off. The point of highest tension occurred when realized volatility skyrocketed, triggering aggressive selling alerts throughout the ecosystem. However, the index has begun to ease slightly in the last 24 hours, although the short-term slope suggests that selling pressure has not yet completely disappeared.
Historically, the Fear and Greed Index has fallen below 10, entering an “Extreme Fear” zone that is usually constructive for prices. Economist Alex Kruger noted that in the 11 similar capitulation events since 2018, almost all resulted in significant rebounds. Thus, historical patterns confirm that when panic reaches its peak, future returns tend to skew heavily to the upside, offering average returns of 10% in the first week and accelerating up to 33% in six months.
Is this the definitive moment for an aggressive market recovery?
Furthermore, on-chain metrics indicate that short-term holders (STH) are selling at a loss, confirming deep capitulation. The profit ratio of these investors (SOPR) has fallen to 0.97, remaining below 1.0 for several weeks. Likewise, the transfer of 65,200 BTC to exchanges at a loss validates that the fear is real and not theoretical. This market structure usually appears near cyclical turning points, where weak hands exhaust their supply and allow smart money to accumulate discounted positions.
To conclude, the current situation of the crypto economy suggests that, although short-term weakness is evident, the end of the correction could be near. The combination of a negative SOPR and massive inflows to exchanges indicates that the market is purging previous excess optimism. Consequently, liquidity is expected to shift and facilitate a sustainable price recovery, provided that external macroeconomic factors do not exert additional pressure on investor sentiment in the coming weeks.
