Bitcoin sees $2.3B in losses in largest capitulation since 2021

Bitcoin recorded $2.3 billion in realized losses over the past week – one of the biggest capitulation spikes in the market’s history. According to data from analyst IT Tech, published on CryptoQuant, the scale is comparable to the 2021 crash, the Terra and FTX collapses in 2022, and the mid-2024 correction. It ranks as roughly the third to fifth largest event of its kind, marked by short-term holders exiting positions with steep losses.

Bitcoin has dropped nearly 50% from its October peak above $126,000 and is trading around $66,600 after a brief rebound from $60,000. Historical data shows that such loss spikes often precede local reversals, but analysts warn that this cycle may enter a phase of “deep and slow bleed.” Even in bear markets, short-lived rallies occur but fail to break the broader downtrend.

A key signal for a potential bottom is the realized price level – now near $55,000. CryptoQuant notes that in previous cycles, BTC often fell 24–30% below this threshold before stabilizing. That suggests the true bottoming zone could sit much lower than current prices.

Additional uncertainty is highlighted by LVRG Research. Nick Rucka, the firm’s director of analytics, says the panic selling by short-term holders reflects not only liquidation shocks but also pressure from the macro backdrop. He argues that a full market bottom requires both deep price declines and signs of sustained demand – from institutional buyers and miners, whose activity has weakened in recent weeks.

Rucka forecasts major support levels in the $40,000–$60,000 range, aligning with other analysts tracking falling mining difficulty and fading speculative activity. Investors also note declining open interest and worsening sentiment – typical markers of the late stages of bear cycles.

Despite the scale of the capitulation, history shows that the strongest panic events often form the foundation for future recoveries. However, analysts caution that the market may need more time to flush out excess leverage, stabilize mining economics, and wait for long-term demand to return.