Bitcoin, as you know, is in a pretty deep correction from the all time highs, with prices still around 50% below the peak. At the same time, we can see traders aggressively positioning for higher prices despite Bitcoin not yet confirming any meaningful reversal. This tells us that many traders are buying the dip quite aggressively and are expecting a recovery.
However, it is also possible that there are still too many traders trying to take advantage of Bitcoin at current prices. If that is the case, another liquidation event cannot be ruled out before the market can recover more sustainably. After all, markets rarely reward the majority that easily. The most important reversals often occur when the expected move is not overcrowded and when positioning has already been washed out.
At the same time, short term holder profitability remains relatively elevated. Despite the recent decline toward the 60000 area, there has not been any kind of a major capitulation among short term holders. In other words, we have not yet seen the type of losses that have often marked important lows in previous cycles.
Historically, major Bitcoin bottoms have tended to form when the Short Term Holder SOPR drops sharply, often toward 0.90 or lower, signaling that a large portion of recent buyers are realizing losses. We have seen this pattern several times in previous market cycles before meaningful recoveries began.
This does not mean Bitcoin must make another low, but it does suggest that the market may still be missing a final washout event. Until we see a deeper reset in short term holder profitability, there remains a possibility that Bitcoin could experience one more leg lower before a more durable bottom is established.
Grega
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