Bitcoin Holds $66K Amid Deep Capitulation Signals: Is a $40K Bottom Still Ahead?
Bitcoin (BTC) is currently trading at $66,000 teetering on a perilous edge as market attitude changes from cautious optimism to conservative
Quick overview
- Bitcoin is currently trading at $66,000, down 1.7% in the past day, with analysts warning of a potential price drop to $40,000–$50,000 due to a 'capitulation zone.'
- Long-term holders have sold 245,000 BTC in the last 30 days, indicating a significant shift in market sentiment and a deep capitulation phase.
- The futures market shows signs of a possible reversal, but the spot market remains under pressure, with a notable decrease in stablecoin supply impacting liquidity.
- Analysts predict that if Bitcoin follows past bear cycles, the final bottom could form in Q4 2026, with prices potentially stabilizing between $40,000 and $50,000.
Bitcoin BTC/USD is currently trading at $66,000, teetering on a perilous edge as market attitude changes from cautious optimism to a conservative “wait-and-see” mentality. The leading cryptocurrency, down 1.7% over the past day, was unable to hold onto its intraday high of $68,300 on Thursday. Now, analysts caution that a “capitulation zone” has developed, where a liquidity drain and significant selling by long-term holders may push prices toward the $40,000–$50,000 level before the year is out.
BTC’s On-Chain Distress: Long-Term Holders are Bowing Out
Bitcoin’s present technical environment is becoming more and more characterized by “capitulation,” a stage at which even the most devoted investors start to get out. The supply held by these “strong hands” dropped by 245,000 BTC over the last 30 days, according to Glassnode’s Long-Term Holder (LTH) Net-Position Change, which shows a cycle-relative extreme. Throughout February, this cohort has been unloading 170,000 BTC every day on average.
The MVRV Adaptive Z-Score, which has fallen to -2.66, is another indicator that supports the pessimistic outlook. This confirms that Bitcoin is in a deep capitulation phase, which is typically a sign of protracted consolidation, according to CryptoQuant. Additionally, Bitcoin’s Realized Profit/Loss Ratio is about to drop below 1, which is a typical indicator of a broad-based market wash-out where realized losses start to outstrip profit-taking.
Bitcoin Derivatives Danger: Overcrowded Shorts and Squeeze Potential
The futures market is displaying a possible, albeit erratic, reversal signal, but the spot market is still experiencing pressure. For days, Bitcoin’s daily financing rate has been extremely negative, falling to its lowest points since the March 2023 U.S. banking crisis.
The Bear Trap: When short sellers have negative funding, they are paying long sellers to maintain their holdings. When this trade gets “overcrowded,” it creates a precarious situation in which a slight price increase can cause a short squeeze, which would force bears to repurchase their positions and push the price higher.
The Liquidity Gap: Institutional backing is faltering, though. The supply of stablecoins (USDt and USDC) has decreased by $2.87 billion in the past 30 days. The likelihood of a long-term recovery is still slim in the absence of new capital inflows into stablecoins.
Bitcoin Price Prediction: Q4 2026 Bottom or Prolonged Consolidation?
There is disagreement among analysts over how long the pain will last as Bitcoin is trading around 48% below its October peak of $126,000.
The Bearish Floor: If Bitcoin follows the pattern of the bear cycles in 2018 and 2022, analysts like Titan of Crypto and Tony Research predict that the final bottom will probably form in Q4 2026, with objectives ranging from $40,000 to $50,000.
The “LUNA-Style” Risk: According to Glassnode, Bitcoin is presently stuck between its “Realized Price” of $55,000 and its “True Market Mean” of $79,200. If $72,000 is not recovered, unless a systemic shock pushes the price below $55,000, a protracted range-bound phase like to the first half of 2022 may ensue.
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